CELEX: 32019M9276
Language: en
Date: 2019-03-27 00:00:00
Title: Commission Decision of 27/03/2019 declaring a concentration to be compatible with the common market (Case No COMP/M.9276 - Sika AG / Financière Dry Mix Solutions SAS) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                Brussels, 27.03.2019
                                                                C(2019) 2531 final
                                                                              PUBLIC VERSION
                                                                 In the published version of this decision,
                                                                 some information has been omitted
                                                                 pursuant to Article 17(2) of Council
                                                                 Regulation      (EC)      No     139/2004
                                                                 concerning non-disclosure of business
                                                                 secrets     and      other     confidential
                                                                 information. The omissions are shown
                                                                 thus […]. Where possible the
                                                                 information omitted has been replaced by
                                                                 ranges of figures or a general description.
                                                                To the notifying party
Subject:            Case M.9276 - Sika/Financière Dry Mix Solutions
                    Commission decision pursuant to Article 6(1)(b) of Council
                    Regulation No 139/20041 and Article 57 of the Agreement on the
                    European Economic Area2
Dear Sir or Madam,
(1)       On 20 February 2019, the European Commission received notification of a
          proposed concentration pursuant to Article 4 of the Merger Regulation by which
          Sika AG (‘Sika’, Switzerland) acquires within the meaning of Article 3(1)(b) of
          the Merger Regulation sole control of the whole of Financière Dry Mix Solutions
          SAS (‘Parex’, France) (the ‘Transaction’), by way of purchase of shares (Sika and
          Parex are designated hereinafter as the ‘Parties’).3
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 75, 28.02.2019, p. 6.
Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE
Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË
Tel: +32 229-91111. Fax: +32 229-64301. E-mail: COMP-MERGER-REGISTRY@ec.europa.eu.
 ---pagebreak--- 1.      THE PARTIES
(2)     Sika is a developer and producer of high-quality concrete admixtures, mortars,
        sealants and adhesives, damping and reinforcing materials, structural
        strengthening systems, industrial flooring as well as roofing and waterproofing
        systems, which are used in the building sector and by manufacturing industries.
(3)     Parex is mainly active in the production and commercialisation of mortar
        products used in the construction industry. Parex’s products fall into three
        business lines: (i) façade protection and decoration (comprising façade renders
        and external thermal insulation composite systems (‘ETICS’)), (ii) ceramic tile-
        setting materials (such as tile adhesives, self-levelling compounds, or tile grouts),
        and (iii) concrete repair and waterproofing systems (such as technical products
        used on existing concrete works).
(4)     The Saint-Gobain Group (‘Saint-Gobain’) holds a minority shareholding
        (10.75%) in Sika.4 Saint-Gobain attempted a hostile takeover of Sika, which
        ended on 11 June 2018 through a settlement agreement between Saint-Gobain and
        the Burkard Family. As a result, Saint-Gobain became a minority shareholder of
        Sika, but that minority shareholding does not confer any veto rights upon Saint-
        Gobain and it is subject to a number of lock-up provisions. At the core there is a
        prohibition to (i) increase its stake beyond the current shareholding (until 11 May
        2022) and not beyond 12.875% (until 11 May 2024), and to (ii) reach any vote
        pooling agreements or similar agreements between Saint-Gobain and other
        shareholders in Sika. In addition, Saint-Gobain is not represented on the board of
        Sika and its voting power does not provide any control (not even through a
        blocking minority) given that typically at least 60% of all votes are being
        represented at the ordinary general assembly of Sika, and decisions require
        absolute majority of the votes represented at the general assembly.
2.      THE CONCENTRATION
(5)     On 7 January 2019, the Parties signed a Put Option Agreement setting out Sika’s
        irrevocable commitment to purchase 100% of the shares in Parex on the terms
        and conditions set forth in the Sale and Purchase Agreement (‘SPA’). The Put
        Option Agreement allows the sellers, upon completion of a works council
        consultation process in France, to sell to Sika the shares in Parex in accordance
        with the agreed SPA, which was executed on 12 February 2019.
(6)     As a result of the Transaction, Sika will acquire sole control over Parex within the
        meaning of Article 3(1)(b) of the Merger Regulation.
3.      EU DIMENSION
(7)     The undertakings concerned have a combined aggregate world-wide turnover of
        more than EUR 5 000 million5 (Sika: EUR 5 949 million, Parex: EUR 1 023
4   Form CO, paragraph 31; Parties’ response to the Commission’s request for information RFI 2,
    questions 1 and 2.
5   Turnover calculated in accordance with Article 5 of the Merger Regulation and the Commission
    Consolidated Jurisdictional Notice (OJ C 95, 16.4.2008, p. 1).
                                                        2
 ---pagebreak---        million). Each of them has an EU-wide turnover in excess of EUR 250 million
       (Sika: EUR […], Parex: EUR […]), but they do not achieve more than two-thirds
       of their aggregate EU-wide turnover within one and the same Member State. The
       notified operation therefore has an EU dimension.
4.     MARKET DEFINITION AND COMPETITIVE ASSESSMENT
(8)    The activities of the Parties overlap in different areas giving rise to horizontally
       affected markets in France in (i) mortars, in particular (a) construction dry premix
       mortar and (b) tile-fixing dry premix mortar; (ii) chemical-based concrete and
       mortar admixtures; (iii) concrete works, in particular structural
       reinforcing/strengthening; (iv) polyurethane (‘PU’) sealants for DIY6/consumers
       and, in Spain in (v) ETICS.
     4.1.   Mortars
(9)    Mortar is a building material, usually made of sand, binders (like cement) and
       various additives (for example, pigments or waterproof compounds). Mortars are
       used to bind construction materials together or to fill the gap between them. In
       particular, construction mortars are used for various building construction
       purposes (e.g. casting and setting, masonry, plastering, floor levelling, and
       concrete repair); while tile-fixing mortars are used for fixing tiles, both on
       substrate (adhesive mortars) and as sealants between tiles (grouts).
            4.1.1.     Market definition
                       4.1.1.1.     Product market definition
                                   (a)   The Commission’s precedents
(10)   In previous decisions, the Commission distinguished between premix mortars,
       which are mixed at the factory and on-site mortars, which are mixed on the
       construction site.7
(11)   Within premix mortars, the Commission distinguished between dry mortars
       (supplied in a dry powder form), wet mortars (ready-mixed with water at the
       factory), and ready-to-use paste mortars (supplied as paste, including organic
       compounds as binders).8
(12)   The Commission also distinguished between mortars based on the application,
       namely: (i) construction mortars, used for various building construction purposes
       such as casting and setting, masonry, plastering, floor levelling and concrete
       repair; (ii) façade mortars, used as an outer layer of buildings for protective or
       aesthetic purposes, or as part of insulation systems and (iii) tile-fixing mortars,
6   DIY refers to ‘Do-It-Yourself.’
7   Commission Decision in Case M.7498 – Compagnie de Saint-Gobain/Sika (2015), recital 25;
    Commission Decision in Case M.4898 – Compagnie de Saint-Gobain/Maxit (2008), recitals 16 and 19;
    Commission Decision in Case M.3572 – Cemex/RMC (2014), recitals 14-17.
8   Commission Decision in Case M.7498 – Compagnie de Saint-Gobain/Sika (2015), recitals 25 and 26;
    Commission Decision in Case M.4898 – Compagnie de Saint-Gobain/Maxit (2008), recital 20.
                                                    3
 ---pagebreak---        used for fixing tiles, both on substrate (adhesive mortars) and as sealants between
       tiles (grouts).9
                                (b)    The Parties’ views
(13)   The Parties agree with the segmentation adopted by the Commission in previous
       decisions. The Parties thus submit that mortars should be segmented according to
       (i) the place where the mortar is mixed, (ii) the physical form of the mortar, and
       (iii) the final application of the mortar.10
                                (c)    The Commission’s assessment
(14)   The majority of respondents to the market investigation (customers and
       competitors) confirmed that the market for mortar should be divided according to
       (i) the place where the mortar is mixed (at factory or on the construction site), (ii)
       the physical form of the mortar (dry, wet or paste), and (iii) the final application
       of the mortar (construction, tile-fixing or façade).11
(15)   In the present case, the overlap between Parties’ activities gives rise to
       horizontally affected markets in (i) construction dry premix mortar, and (ii) tile-
       fixing dry premix mortar. With regard to these products, the majority of the
       respondents (customers and competitors) to the market investigation confirmed
       that there is a price difference between them; tile-fixing dry premix mortar is
       more expensive than construction dry premix mortar.12
(16)   In line with previous Commission decisions and considering the information
       provided by the Parties and the results of the market investigation, the
       Commission is of the view that construction dry premix mortar and tile-fixing dry
       premix mortar should be considered separate product markets for assessing the
       Transaction.
                      4.1.1.2.   Geographic market definition
                                (a)    The Commission’s precedents
(17)   In previous decisions, the Commission left the geographic market definition open
       and conducted the competitive assessment both at national and at local/regional
       levels, assuming a 120 km radius around the production plant.13 In another
9  Commission Decision in Case M.7498 – Compagnie de Saint-Gobain/Sika (2015), recital 27;
   Commission Decision in Case M.7249 – CVC/Parexgroup (2014), recitals 17 and 18; Commission
   Decision in Case M.4898 – Compagnie de Saint-Gobain/Maxit (2008), recitals 21 and 22.
10 Form CO, paragraph 63.
11 Questionnaire to Customers (France) - Q2, question 6; Questionnaire to Competitors (France) – Q1,
   question 5.
12 Questionnaire to Customers (France) - Q2, question 7; Questionnaire to Competitors (France) – Q1,
   question 6.
13 Commission Decision in Case M.7249 – CVC/Parexgroup (2014), recitals 20-23; Commission
   Decision in Case M.4898 – Compagnie de Saint-Gobain/Maxit (2008), recitals 27-29; Commission
   Decision in Case M.4719 – Heidelberg Cement/Hanson (2007), recitals 32 and 35; Commission
   Decision in Case M.1779 – Anglo American/Tarmac (2000), recital 23.
                                                    4
 ---pagebreak---       decision, the Commission considered that the geographic market corresponded to
      a radius of 120 km around each of the Parties’ production plants.14
(18)  In the most recent decision concerning mortars, the Commission carried out its
      competitive assessment on the basis of (i) national markets and, (ii) with regard to
      large volume/low value heavy mortars, the Commission also considered narrower
      hypothetical regional/local markets, assuming a 120 km radius around production
      plants.15
                               (b)   The Parties’ views
(19)  The Parties submit that the geographical markets in the area of premix mortars
      should be national for all sub-segments.16
(20)  They argue that their supplies of mortars are not limited to a certain geographic
      area within a country. The Parties explain that they have either only one plant per
      country or if there are several production plants their supply area would be much
      larger than a 120 km radius around those plants. Moreover, they submit that even
      low value/large volume premix mortars (price range up to approximately EUR
      […] per kg) tend to be distributed in a much larger radius than 120 km around the
      respective plant and that the price level tends to be homogeneous at a national
      level.17
(21)  The Parties add that in certain markets like France, distance plays a less important
      role for large volume/low value heavy mortars because, compared to building
      traditions in other countries, large volume/low value heavy mortars are used only
      to a small extent in France. They are therefore produced in lower quantities and
      fewer production sites, which makes shipping over longer distances necessary.18
(22)  The Parties further explain that construction and tile-fixing dry premix mortar
      products could be partially qualified as low value/large volume premix mortars,
      and the Parties sell these products to customers that are located more than 120 km
      from their respective production plants in France. They add that those
      construction dry premix mortar products are mostly shipped over distances that
      are even longer than 300 km.19
                               (c)   The Commission’s assessment
(23)  The Parties’ respective sales of construction and tile-fixing dry premix mortars in
      France in 2017, sold in radii of 120 km, 300 km, and 600 km around the Parties’
      plants, are set out in Table 1 and Table 2 below.
14 Commission Decision in Case M.7054 – Cemex/Holcim Assets (2014), recital 356.
15 Commission Decision in Case M.7498 – Compagnie de Saint-Gobain/Sika (2015), recital 36.
16 Form CO, paragraph 65.
17 Form CO, paragraph 66.
18 Form CO, paragraph 67.
19 Form CO, paragraph 68.
                                                 5
 ---pagebreak---  ---pagebreak--- (25)  With regard to construction dry premix mortar, the same number of customers
      indicated that the shipping distance from their supplier to their outlet (s) was 0–
      120 km and 120–300 km.21 Concerning competitors, the competitors that
      expressed a view indicated that the majority of their sales took place in a radius
      larger than 120 km around their production plants.22
(26)  Regarding tile-fixing dry premix mortar, the same number of customers indicated
      that, for the majority of their sales, the shipping distance from the supplier’s plant
      to their outlet (s) was 0–120 km and 120–300 km.23 The majority of competitors
      that expressed a view respondents indicated the majority of their sales took place
      in a radius of 120 to 300 km from their plants.24
(27)  Therefore, in the present case, the sales of the Parties and the results of the market
      investigation do not seem to support a geographic market definition based on
      sales done in a radius of less than 120 km around the Parties’ production plants.
(28)  In conclusion, in line with previous Commission decisions and considering the
      information provided by the Parties and the results of the market investigation,
      the Commission is of the view that, for assessing the Transaction, the relevant
      geographic market for construction dry premix and tile-fixing dry premix mortars
      could be national in scope. In any event, the precise geographic market definition
      can be left open, as the Transaction does not raise competition concerns under any
      plausible market definition.
           4.1.2.     Competitive assessment
(29)  The Parties’ activities in mortar overlap in the areas of façade dry, façade paste,
      construction dry, tile-fixing dry and tile-fixing paste premix mortars, giving rise
      to affected markets for construction dry premix mortar and tile-fixing dry premix
      mortar at national level (France) and at a local/regional level, assuming 120 km,
      300 km and 600 km radii around Parex’s production plants in France.
                      4.1.2.1.   The Parties’ views
(30)  With regard to both construction and tile-fixing dry premix mortars, the Parties
      submit that the Transaction does not raise competition concerns because the
      Parties’ combined market share will be lower than [20-30]% for construction dry
      premix mortar and lower than [20-30]% for tile-fixing dry premix mortar.
      Moreover, the combined entity will continue to face significant competition from
      both large competitors, including multinational, and smaller local competitors.
(31)  With regard to construction dry premix mortar, the Parties also claim that new
      competitors successfully entered the market for construction dry premix mortar in
      France. Concerning tile-fixing dry premix mortar, the Parties submit that private
      labels offered by distributors exercise significant price pressure.
21 Questionnaire to Customers (France) – Q2, question 8.
22 Questionnaire to Competitors (France) – Q1, question 7.1.
23 Questionnaire to Customers (France) – Q2, question 8.
24 Questionnaire to Competitors (France) – Q1, question 7.2.
                                                      7
 ---pagebreak---  ---pagebreak---  ---pagebreak---         among the three companies that offer most similar products to those of Parex30
        and five customers shared this view.31
(40)    However, in response to both questions on similarity (see first phrase of
        paragraph (39) above), the majority of the respondents (customers and
        competitors) to the market investigation also mentioned Saint-Gobain (Weber)
        among the three companies that offer most similar products to those of the
        Parties. 32
(41)    Furthermore, the Commission also took into account in its assessment the
        difference in price between Sika’s and Parex’s products in this market.33 Sika’s
        average sales price is clearly higher than Parex’s prices. According to the Parties,
        construction dry premix mortars are standardised but not identical. There are
        different levels of sophistication demanded by customers. High sophistication
        requires more components/raw materials, hence higher costs and different cost
        structures. Sika offers more sophisticated products, while Parex offers more basic
        ones; but while the Parties’ average sales prices for construction dry premix
        mortar are significantly different, their gross profit margins are closer to each
        other.34
(42)    With regard to competitive pressure and based on the information provided by the
        Parties, the Commission considers that the market for construction dry premix
        mortars is driven by prices and post-Transaction, Saint-Gobain (Weber), Mapei
        and BASF are likely to continue exercising significant competitive pressure on
        the combined entity. All of them have market shares above 5% and have two or
        more mortar production plants in France.35
(43)    Moreover, Saint-Gobain (Weber) and Mapei are historical market leaders of the
        market for construction dry premix mortar.36 Furthermore, Saint-Gobain has an
        important distribution network in France, in which it sells under different banners,
        including Point.P Materiaux de Construction, Point.P Travaux Publics,
        Décpcéram or La Plateforme du Bâtiment;37 and according to the Parties, Mapei
        is known for its aggressive pricing strategy.38
(44)    Additionally, the Parties claim that small suppliers price very aggressively and
        exercise significant price pressure on the market.39 The Parties identified six
        competitors with market shares between [0-5]% and [0-5]% and other suppliers
        with a combined market share of [10-20]%. The majority of the customers that
        responded to the market investigation confirmed that smaller suppliers exercise
30 Questionnaire to Competitors (France) – Q1, question 12.
31 Questionnaire to Customers (France) – Q2, question 13.
32 Questionnaire to Customers (France) – Q2, questions 12 and 13; Questionnaire to Competitors
   (France) – Q1, questions 11 and 12.
33 Parties’ response to the Commission’s request for information RFI 2, question 6.
34 Parties’ response to the Commission’s follow-up questions to request for information RFI 2, question
   2.a.
35 Form CO, paragraph 125.
36 Parties’ response to the Commission’s request for information RFI 2, question 7.
37 Questionnaire to Competitors (France) – Q1, question 35. See also Saint-Gobain’s website at:
   http://www.sgdb-france.fr/nos-enseignes-XR57.
38 Form CO, paragraph 126.
39 Form CO, paragraph 127.
                                                       10
 ---pagebreak---  ---pagebreak---        little time and cost associated with switching production assuming the right
       equipment is available.”51
(50)   With regard to barriers to entry, the majority of competitors indicated that in the
       market for construction dry premix mortar, there are barriers that prevent entry
       such as regulatory requirements at Union and national levels.52 The Commission
       notes that the regulatory requirements, as described by the Parties, seem to take
       less than 1 year and entail investments of less than EUR 100 000.53
(51)   Moreover, the majority of the customers that responded to the market
       investigation indicated that entry was possible54 and two competitors indicated
       that there have been new entries in the last five years and referred to the following
       companies: S&P Reinforcement (‘S&P’), Cermix and RUREDIL.55
(52)   In this regard, the Parties explained that S&P announced a launch of a range of
       mortar products in 2019;56 Cermix and PRB entered the market for construction
       dry premix mortar from the markets for tile-fixing and façade dry premix mortars,
       respectively.57 Furthermore, the Parties stated that Baumit may also have plans to
       enter the French market shortly.58
(53)   With regard to the impact of the Transaction in the market for construction dry
       premix mortar, the majority of competitors that responded to the market
       investigation expect a decrease in product choice and price 59 and the majority of
       customers that expressed a view expect an increase of prices.60
(54)   Additionally, a competitor indicated that the minority shareholding (10.75%) that
       Saint-Gobain has in Sika, could give the combined entity a significant
       competitive advantage and its products could receive a preferential treatment
       within Saint-Gobain’s distribution network in France at the expense of other
       suppliers.61
(55)   Before the Transaction, Sika and Parex already had separate distribution
       agreements with Saint-Gobain. They sold their products in part through Saint-
       Gobain’s distribution network in France. Taking this into account, the distribution
       related issue raised during the market investigation is not merger specific with
       regard to Sika. With regard to Parex, the Commission considers that based on the
       information provided by the Parties even if Saint-Gobain could have the ability to
       provide preferential treatment to the products of the combined entity, it is unlikely
51 Questionnaire to Competitors (France) – Q1, question 17.
52 Questionnaire to Competitors (France) – Q1, questions 20.1 and 20.1.1.
53 Parties’ response to the Commission’s request for information RFI 2 and follow-up questions,
   questions 10 and 3.a, respectively.
54 Questionnaire to Customers (France) – Q2, question 30.
55 Questionnaire to Competitors (France) – Q1, questions 19.1 and 19.1.1.
56 Parties’ response to the Commission’s request for information RFI 2, question 9.
57 Form CO, paragraph 128.
58 Parties’ response to the Commission’s request for information RFI 2, question 11; see also, Form CO,
   paragraph 237.
59 Questionnaire to Competitors (France) – Q1, question 34.1.
60 Questionnaire to Customers (France) – Q2, question 32.1; Questionnaire to Competitors (France) –
   Q1, question 34.1.
61 Questionnaire to Competitors (France) – Q1, question 33.1.
                                                       12
 ---pagebreak---         that it would have the incentives to do so. Saint-Gobain is not the only available
        distributor; there are other relevant distributors available in France such as
        Chausson, Gedimat, CMEM or Leroy Merlin that follow a multi-brand strategy.
        Only one respondent to the market investigation raised this issue without further
        substantiation besides the minority shareholding of Saint-Gobain in Sika.
        However, Saint-Gobain would not be able to recapture the reduction of the sales
        of its own products, which would derive from providing preferential treatment to
        the Parties’ products, through the benefits resulting from its minority
        shareholding in Sika. Moreover, according to public available sources, in
        February 2019 Saint-Gobain was considering selling part of its distribution
        network in France, Point.P Travaux Publics.62
(56)    The Commission notes that, based on the information provided by the Parties and
        the results of the market investigation, post-Transaction the combined entity
        would become a market leader in construction dry premix mortar at a national
        level; however, the Parties’ combined share would remain moderate ([20-30]%)
        and, under a narrower relevant geographic market based on the location of
        Parex’s production plants, the Parties’ combined shares would be lower (see
        Table 4 above).
(57)    Moreover, post-Transaction more than 10 competitors would remain in the
        market and they are likely to continue exercising significant competitive pressure
        on the combined entity.
(58)    The Commission further notes that (i) customers have some degree of buyer
        power and multisource; (ii) there is spare capacity in the market and it is possible
        to switch production from tile-fixing to construction dry premix mortar, and (iii)
        there have been new entrants in the last five years, which have quickly obtained
        market recognition (e.g. market shares of 3.4%) and more entrants are expected.
        Additionally, the Parties claim that in this market product choice for customers
        increases rather than decreases.63
(59)    In conclusion, in light of the evidence available to it, the Commission considers
        that the Transaction does not raise serious doubts as to its compatibility with the
        internal market with regard to the market for construction dry premix mortar in
        France.
                                  (b)      Tile-fixing dry premix mortar
(60)    The market shares of the Parties and their competitors in the market for tile-fixing
        dry premix mortar in France in 2017 are set out in Table 6 below.
62 Press release of 12 February 2019, Point.P TP pourrait être vendu par Saint-Gobain, available at:
   https://www.lemoniteurmateriels.fr/article/point-p-tp-pourrait-etre-vendu-par-saint-gobain,817230.
63 Parties’ response to the Commission’s request for information RFI 2, question 11.
                                                       13
 ---pagebreak---  ---pagebreak---  ---pagebreak---        and among them, only one customer ranked the Parties next to each to other, the
       other customers ranked them more distantly.67
(66)   The results of the market investigation confirm that there is spare capacity in the
       French market for tile-fixing dry premix mortar, and therefore that competitors
       could respond to increased demand. The Parties indicated that they experience
       overcapacity in all their respective plants in France.68 Responses from the
       competitors that expressed a view suggest that they are in a similar situation.
       Indeed, the majority of competitors that expressed a view indicated that they have
       spare capacity for the production of tile-fixing dry premix mortar in France.69
       Consequently, they confirmed that they would be able take on new orders and
       increase their production quickly and without incurring significant costs.70
(67)   The results of the market investigation confirm the Parties’ views on customers’
       strong buyer power. All the competitors that expressed a view indicated that
       customers for tile-fixing dry premix mortar have strong buyer power.71 One
       competitor notably explained that tile-fixing dry premix mortar is more
       commoditized compared to construction dry premix mortar and the market is
       “more mature.”72 Similarly, the majority of customers that expressed a view
       indicated that they have negotiating power over one or both Parties in relation to
       their purchases of tile-fixing dry premix mortar.73 Several customers explained
       notably their negotiating power is due to the presence of numerous competitors in
       the market.74
(68)   In the same vein, the results of the market investigation suggest that customers
       can easily switch suppliers. The majority of customers that expressed a view
       indicated that they have more than two suppliers for tile-fixing dry premix
       mortar.75 The majority of customers that expressed a view indicated they have not
       switched suppliers.76 However, they also indicated that they could start
       purchasing from a new supplier quickly and without incurring significant costs.77
(69)   The results of the market investigation do not confirm the Parties’ views on the
       ability of suppliers to enter the market due to low barriers to entry. The majority
       of respondents to the market investigation (customers and competitors) that
       expressed a view indicated that there has been no entry in the last five years.78
       One competitor identified two suppliers, which allegedly entered the market in
       the past five years (namely, Kerakoll and Ardex). The Parties subsequently
       confirmed that those two suppliers have been present in the market but for a
       longer period (approximately 10 years for Kerakoll and more than 15 years for
67 Questionnaire to Customers (France) – Q2, question 10.
68 Form CO, paragraphs 174 and 180.
69 Questionnaire to Competitors (France) – Q1, question 15.2.
70 Questionnaire to Competitors (France) – Q1, question 16.2.
71 Questionnaire to Competitors (France) – Q1, question 18.2.
72 Questionnaire to Competitors (France) – Q1, question 18.2.1.
73 Questionnaire to Customers (France) – Q2, question 29.
74 Questionnaire to Customers (France) – Q2, question 29.
75 Questionnaire to Customers (France) – Q2, question 16.2.
76 Questionnaire to Customers (France) – Q2, question 17.2.
77 Questionnaire to Customers (France) – Q2, question 18.2.
78 Questionnaire to Competitors (France) – Q1, question 19.2; Questionnaire to Customers (France) –
   Q2, question 30.
                                                     16
 ---pagebreak---        Ardex).79 The Commission notes that they are not part of the main competitors
       identified by the Parties in Table 6 above. Half of the customers that expressed a
       view indicated that entry would not be possible.80 The Commission further notes
       that several customers considered that the presence of numerous competitors in
       the market would act as a barrier to entry, because the market would be less
       attractive for new suppliers.81
(70)   With regard to the impact of the Transaction, the majority of participants to the
       market investigation (competitors and customers) that expressed a view indicated
       that they would not expect price increases, losses of quality and choice post-
       Transaction.82 Some participants indicated that prices would increase and product
       choice would decrease. However, those claims were based on the reduction of the
       number of competitors but they were not further substantiated.83 One competitor
       indicated that prices could decrease due to the size of the combined entity that
       would allow it to pursue an aggressive pricing strategy, but this claim was also
       not further substantiated.84
(71)   On balance and in light of the evidence available to it, the Commission considers
       that the Transaction does not raise serious doubts as to its compatibility with the
       internal market with regard to the market for tile-fixing dry premix mortar in
       France.
     4.2.    Chemical-based concrete and mortar admixtures
(72)   Concrete and mortar admixtures are ingredients that are added to improve the
       properties of concrete or mortar (e.g. reducing the water content or extending the
       workability). They can be either chemical-based or mineral-based. Within
       chemical-based admixtures, so-called performance polymers are one of the most
       important groups.
             4.2.1.    Market definition
                       4.2.1.1.   Product market definition
                                 (a)    The Commission’s precedents
(73)   As regards concrete and mortar admixtures, the Commission found in previous
       decisions that chemical-based and mineral-based admixtures constitute separate
       product markets, due to their different product characteristics, the important price
       differences, the lower performance of mineral-based admixtures and the
       difference in technology and quality.85
79 Parties’ response to the Commission’s request for information RFI 2, question 9 (ii).
80 Questionnaire to Customers (France) – Q2, question 30.
81 Questionnaire to Customers (France) – Q2, question 30.
82 Questionnaire to Competitors (France) – Q1, question 34.2; Questionnaire to Customers (France) –
   Q2, question 32.2.
83 Questionnaire to Competitors (France) – Q1, question 34.2; Questionnaire to Customers (France) –
   Q2, question 32.2.
84 Questionnaire to Competitors (France) – Q1, question 34.2.
85 Commission Decision in Case M.7498 – Compagnie de Saint-Gobain/Sika (2015), recitals 103 and
   105; Commission Decision in Case M.4177 – BASF/Degussa (2006), recital 17.
                                                       17
 ---pagebreak--- (74)   Within chemical-based admixtures, the Commission made no further distinction
       according to the different types of admixtures (such as mortar and concrete
       admixtures) as it found that customers typically source the entirety of the
       admixtures they require from a single supplier, which suggested a high degree of
       supply-side substitutability.86
                                (b)    The Parties’ views
(75)   The Parties agree with the segmentation adopted by the Commission in previous
       decisions on concrete and mortar admixtures. They submit that, in the present
       case, the relevant product market should be the market for chemical-based
       admixtures where the Parties’ activities overlap.87
                                (c)    The Commission’s assessment
(76)   In the market investigation, the majority of respondents (customers and
       competitors) that expressed a view confirmed that the market for concrete and
       mortar admixtures should be further segmented into chemical-based and mineral-
       based concrete and mortar admixtures. These are separate product markets due to
       different characteristics, prices, performance, technology and quality.88
(77)   In line with previous Commission decisions and considering the information
       provided by the Parties and the results of the market investigation, the
       Commission is of the view that chemical-based concrete and mortar admixtures
       should be considered as a separate product market for assessing the Transaction.
                     4.2.1.2.    Geographic market definition
                                (a)    The Commission’s precedents
(78)   In a previous decision, the Commission left open whether the relevant geographic
       market would be EEA-wide or smaller.89 In a more recent decision, the
       Commission conducted the competitive assessment on the basis of national
       markets as the narrowest plausible market definition.90
                                (b)    The Parties’ views
(79)   The Parties submit that the precise geographic market definition for concrete and
       mortar admixtures can be left open. They explain that their activities only overlap
       in chemical-based concrete and mortar admixtures in France.91
86 Commission Decision in Case M.7498 – Compagnie de Saint-Gobain/Sika (2015), recital 104.
87 Form CO, paragraph 78.
88 Questionnaire to Competitors (France) – Q1, question 21; Questionnaire to Customers (France) – Q2,
   question 19.
89 Commission Decision in Case M.4177 – BASF/Degussa (2006), recital 31.
90 Commission Decision in Case M.7498 – Compagnie de Saint-Gobain/Sika (2015), recital. 106.
91 Form CO, paragraph 80.
                                                    18
 ---pagebreak---                                 (c)    The Commission’s assessment
(80)   In the market investigation, the majority of customers and the majority of
       competitors that expressed a view agreed with the Commission’s previous finding
       that the competition conditions for concrete and mortar admixtures are relatively
       homogeneous within certain EEA countries and with the Commission’s analysis
       of competition on a country-by-country basis.92
(81)   In line with the most recent Commission decisions and considering the
       information provided by the Parties and the results of the market investigation,
       the Commission is of the view that, for the purpose of this decision, it will
       consider the relevant geographic market for chemical-based admixtures national
       in scope.
            4.2.2.   Competitive assessment
(82)   The overlap between the Parties’ activities in concrete and mortar admixtures
       gives rise to an affected market in respect of chemical-based concrete and mortar
       admixtures in France.
                     4.2.2.1.    The Parties’ views
(83)   The Parties submit that the Transaction will not raise competition concerns
       because it will lead to a marginal increment in market shares (around [0-5]%) and
       the Parties’ combined market share will be lower than 30%. Moreover, the
       combined entity will continue to face significant competition from numerous
       competitors.
(84)   Additionally, the Parties claim that customers have significant buyer power and
       can easily switch suppliers. The Parties add that barriers to enter the markets are
       low and therefore, competitors can set up production and distribution relatively
       quickly and at small costs.
(85)   The Parties also explain that they face significant overcapacities and assume that
       their competitors are in a similar situation. Accordingly, their competitors would
       be able to respond to increased demand.
                     4.2.2.2.    The Commission’s assessment
(86)   The market shares of the Parties and their competitors in the market for chemical-
       based concrete and mortar admixtures in France in 2017 are set out in Table 8
       below.
92 Questionnaire to Competitors (France) – Q1, question 22; Questionnaire to Customers (France) – Q2,
   question 20.
                                                    19
 ---pagebreak---  ---pagebreak--- (91)   Moreover, in the French market for chemical-based concrete and mortar
       admixtures, customers have some degree of buyer power and, six competitors
       entered the market in the last 10 years.
(92)   In conclusion, in light of the evidence available to it, the Commission considers
       that the Transaction does not raise serious doubts as to its compatibility with the
       internal market with regard to the market for chemical-based concrete and mortar
       admixtures in France.
     4.3.  Concrete works
(93)   Concrete works encompass a variety of products that are used for concrete surface
       treatment or to repair concrete structures, in particular to fill cracks and voids, to
       protect concrete structures against chemicals and corrosion, and to allow the
       application of coatings.
(94)   Within concrete works, the Parties’ activities overlap in the following sub-
       categories: (i) anchoring resins, (ii) bonding agents, (iii) corrosion protection
       control and (iv) structural reinforcing/strengthening.
           4.3.1.   Market definition
                    4.3.1.1.    Product market definition
                               (a)   The Commission’s precedents
(95)   In a previous decision, the Commission found that concrete works should be
       segmented along the following lines: injection resins, polymer concrete, resin-
       based grouts, anchoring resins, bonding agents, primers, impregnations, corrosion
       protection/control, structural reinforcing/strengthening, and ancillaries (cleaners,
       release agents, etc.). Each of those segments constituted a separate product
       market.95
                               (b)   The Parties’ views
(96)   The Parties agree with the segmentation adopted by the Commission in its past
       decision on concrete works. They submit that the relevant product markets should
       be the markets for anchoring resins, bonding agents, corrosion protection control
       and structural reinforcing/strengthening.96
                               (c)   The Commission’s assessment
(97)   In the market investigation, the majority of customers and the majority of
       competitors that expressed a view confirmed the product market definition as
       established in the previous Commission decision, namely the market for concrete
       works should be divided as follows: injection resins, polymer concrete, resin-
       based grouts, anchoring resins, bonding agents, primers, impregnations, corrosion
95 Commission Decision in Case M.7498 - Compagnie de Saint-Gobain/Sika (2015), recital. 114.
96 Form CO, paragraph 83.
                                                 21
 ---pagebreak---         protection/control, structural reinforcing/strengthening, and ancillaries (cleaners,
        release agents, etc.).97
(98)    In line with the Commission’s prior decisional practice and considering the
        information provided by the Parties and the results of the market investigation,
        the Commission is of the view that structural reinforcing/strengthening should be
        considered as a separate product market for assessing the Transaction.
                      4.3.1.2.    Geographic market definition
                                 (a)    The Commission’s precedents
(99)    In a previous decision, the Commission considered that national markets were the
        narrowest plausible geographic market definition and carried out its competitive
        assessment on this basis.98
                                 (b)    The Parties’ views
(100) The Parties submit that the competitive assessment for concrete works, in
        particular for structural reinforcing/strengthening, should be conducted on a
        national basis. They explain that their activities only overlap in some sub-
        segments of concrete works in France and the United Kingdom.99
                                 (c)    The Commission’s assessment
(101) In the market investigation, the majority of customers and the majority of
        competitors that expressed a view agreed with the Commission’s previous finding
        that the competition conditions for concrete works are relatively homogeneous
        within certain EEA countries and with the Commission’s analysis of competition
        on a country-by-country basis.100
(102) In line with the Commission’s prior decisional practice and considering the
        information provided by the Parties and the results of the market investigation,
        the Commission is of the view that, for the purpose of this decision, it will
        consider the relevant geographic market for structural reinforcing/strengthening
        national in scope.
             4.3.2.   Competitive assessment
(103) The overlap between the Parties’ activities in concrete works gives rise to an
        affected market in respect of structural reinforcing/strengthening in France.
(104) Structural reinforcing/strengthening consists of strengthening concrete substrates
        or increasing shear capacity of concrete beams by using prefabricated plates made
        from carbon fibre reinforced polymer or other materials.
97  Questionnaire to Competitors (France) – Q1, question 24; Questionnaire to Customers (France) – Q2,
    question 22.
98 Commission Decision in Case M.7498 - Compagnie de Saint-Gobain/Sika (2015), recital 116.
99 Form CO, paragraph 84.
100 Questionnaire to Competitors (France) – Q1, question 25; Questionnaire to Customers (France) – Q2,
    question 23.
                                                     22
 ---pagebreak---  ---pagebreak---         third party, […].102 Furthermore, Parex’s customers typically procure structural
        reinforcing/strengthening together with other Parex products, in particular with
        construction dry premix mortar.103
(110) The Transaction would bring about a limited increment in market share of [0-5]%
        (which corresponds to sales of EUR […]), and the combined market share of the
        Parties would be slightly above 20% ([20-30]%).
(111) Post-Transaction, the combined entity would be the second largest player ([20-
        30]%), after Freyssinet who would remain the market leader with a market share
        of [20-30]%. The combined entity would be very closely followed by S&P ([10-
        20]%). Three other competitors would remain in the market with market shares
        between [10-20]% and [5-10]%. There would also be a group of unidentified
        competitors with an aggregate market share of [10-20]%. Post-Transaction, the
        combined entity would therefore face competition from several large and
        medium-sized competitors, which would remain active in the market.
(112) Concerning customers’ buyer power, the results of the market investigation
        confirm the Parties’ views, the majority of competitors that expressed a view
        indicated that customers have buyer power.104 Similarly, the majority of
        customers that expressed a view indicated that they have negotiating power over
        either or both Party(ies).105
(113) With regard to barriers to entry, the results of the market investigation do not
        support the Parties’ views according to which competitors can quickly enter the
        market due to low barriers to entry.
(114) None of the competitors that expressed a view considered that new players could
        quickly establish a market presence without incurring significant investments106
        and the majority of customers that expressed a view indicated that entry is not
        possible.107 Participants to the market investigation mentioned several barriers to
        entry, such as certifications, financial and technical abilities and the presence of
        numerous competitors in the market.108 However, according to the Parties, in the
        last 10 years, there have been two entries in the market, Mapei (c. 10 years ago)
        and S&P (c. 5-7 years ago), which have market shares of or above [10-20]%. 109
(115) With regard to the impact of the Transaction, the majority of the respondents
        (customers and competitors) to the market investigation that expressed a view
        indicated that they expect price increases post-Transaction.110 Concerning quality
        and product choice, one competitor expected a decrease while another one
102 Form CO, paragraph 181.
103 Parties’ response to the Commission’s request for information RFI 2, question 16.
104 Questionnaire to Competitors (France) – Q1, question 31.2.
105 Questionnaire to Customers (France) – Q2, question 29.
106 Questionnaire to Competitors (France) – Q1, question 32.2
107 Questionnaire to Customers (France) – Q2, question 30.
108 Questionnaire to Competitors (France) – Q1, question 32.2.1; Questionnaire to Customers (France) –
    Q2, question 30.
109 Parties’ response to the Commission’s request for information RFI 2, questions 10 and 22.
110 Questionnaire to Competitors (France) – Q1, question 34.4; Questionnaire to Customers (France) –
    Q2, question 32.4.
                                                        24
 ---pagebreak---         expected no changes.111 However, these claims were mainly based on the
        reduction of the number of competitors but they were not further substantiated.
(116) The Commission finds that the Transaction is unlikely to significantly change the
        market structure. Parex has a market share below [0-5]%. It does not produce
        these products and procures them from a third party. Post-Transaction, Freyssinet,
        which would remain the market leader ([20-30]%) and the other competitors in
        the market (more than five) are likely to continue exercising competitive pressure
        on the combined entity. In fact, in the last two years, based on the Parties’ data,
        Sika’s prices decreased by more than [5-10]% each year and Parex’s prices
        […].112
(117) Moreover, in the French market for structural reinforcing/strengthening,
        customers have buyer power and, despite the existence of barriers to entry, two
        competitors entered in the last 10 years. Furthermore, one of the barriers to entry
        mentioned in the market investigation was the presence of numerous competitors
        (see paragraph (114) above).
(118) Additionally, the Parties explained that the combined entity would not have
        incentives to increase prices because the market is very price sensitive and
        customers will otherwise switch to other suppliers.113 As regards product choice,
        the Parties explained that the combined entity would very likely continue to offer
        Parex’s products post-Transaction.114 Moreover, concerning decrease of quality,
        regulatory requirements are likely to be a safeguard against it.
(119) In conclusion, on balance and in light of the evidence available to it, the
        Commission considers that the Transaction does not raise serious doubts as to its
        compatibility with the internal market with regard to the market for structural
        reinforcing/strengthening in France.
     4.4.     Sealants
(120) Sealants are substances used to block the passage of fluids through the surface of
        joints or openings in materials such as sanitary joints, roofing joints, expansion
        joints and window and door joints.
              4.4.1.    Market definition
                        4.4.1.1.   Product market definition
                                  (a)    The Commission’s precedents
(121) In previous decisions, the Commission considered a possible distinction between
        adhesives and sealants, but ultimately left the market definition open. The
        Commission categorised adhesives and sealants into three end-use groups,
        according to the target customer group, namely adhesives and sealants for
        consumers and DIY customers, adhesives and sealants for the construction sector,
111 Questionnaire to Competitors (France) – Q1, question 34.4.1.
112 Parties’ response to the Commission’s request for information RFI 2, questions 16 and 22.
113 Parties’ response to the Commission’s request for information RFI 2, question 21.
114 Parties’ response to the Commission’s request for information RFI 2, question 22.
                                                        25
 ---pagebreak---         and adhesives and sealants for industrial applications. As regards adhesives and
        sealants for industrial applications, the Commission considered further
        segmentations according to the specific application such as automotive,
        bookbinding, labelling, packaging and according to the adhesive technology, such
        as water-based technologies, solvent-based technologies, hot melts or reactive
        adhesives, but ultimately left the market definition open.115
(122) In its most recent decision on sealants, the Commission considered that there
        were likely distinct product markets for adhesives and for sealants. The
        Commission also considered that the market for sealants should most likely be
        further segmented into sealants produced for the construction and the consumer
        sectors respectively. The Commission noted that the lack of true demand- or
        supply-side substitutability between the different sealant technologies suggested
        that separate product markets may exist for each type of sealant, i.e. acrylic
        sealants, polysulfide sealants, polyurethane sealants, silicone sealants and silyl-
        modified polymers. However, the Commission left ultimately the precise product
        market definition open.116
                                 (b)    The Parties’ views
(123) The Parties submit that the precise product market definition can be left open as
        no competition concerns would arise under the narrowest product market
        definition based on the target customer group and the sealant technology.117
                                 (c)    The Commission’s assessment
(124) In the market investigation, the majority of customers and the majority of
        competitors that expressed a view confirmed the market for sealants should be
        segmented according to (i) the target consumer group (professional construction
        or DIY/consumer), and (ii) the technology (silicone, acrylic, polyurethane (PU),
        silyl-modified polymers).118
(125) In line with the most recent Commission decisions concerning sealants and
        considering the information provided by the Parties and the results of the market
        investigation, the Commission is of the view that PU sealants for DIY/consumers
        should be considered as a separate product market for assessing the Transaction.
                      4.4.1.2.    Geographic market definition
                               (a)      The Commission’s precedents
(126) In previous decisions, the Commission considered that the geographic market for
        industrial sealants and adhesives may vary depending on the application. For
        some of them, the Commission considered the geographic market to be at least
115 Commission Decision in Case M.7465 – Arkema/Bostik (2015), recitals 9-12; Commission Decision
    in Case M.4941 – Henkel/Adhesives & Electronic Business (2008), recitals 10-15; Commission
    Decision in Case M.3612 – Henkel/Sovereign (2004), recitals 10-20.
116 Commission Decision in Case M.8152 - Arkema/Den Braven (2016), recitals 15-31.
117 Form CO, paragraph 105.
118 Questionnaire to Competitors (France) – Q1, question 27; Questionnaire to Customers (France) – Q2,
    question 25.
                                                     26
 ---pagebreak---         EEA-wide. For other applications, the Commission found evidence that suggested
        the presence of national markets.119
(127) In its most recent decision on sealants, the Commission considered it likely that
        the geographical scope for the market for sealants for DIY/consumers was
        national. The geographical market for sealants for the professional construction
        segment was found to be likely supra-national or at least regional, namely
        Western Europe, Central and Eastern Europe, as well as Scandinavia. However,
        the Commission ultimately left the precise geographic market definition open.120
                                  (b)   The Parties’ views
(128) The Parties submit that the precise definition of the geographic market can be left
        open, as the Transaction will not raise competition concerns even when
        considering national markets.121
                                  (c)   The Commission’s assessment
(129) In the market investigation, the majority of customers and the majority of
        competitors that expressed a view agreed with the Commission’s previous finding
        that the competition conditions for sealants are relatively homogeneous within
        certain EEA countries and with the Commission’s analysis of competition on a
        country-by-country basis.122
(130) In line with the most recent Commission decisions and considering the
        information provided by the Parties and the results of the market investigation,
        the Commission is of the view that, for the purpose of this decision, it will
        consider the relevant geographic market for PU sealants for DIY/consumers
        national in scope.
             4.4.2.    Competitive assessment
(131) The overlap between the Parties’ activities in sealants gives rise to an affected
        market in respect of PU sealants for DIY/consumers in France.
                       4.4.2.1.    The Parties’ views
(132) The Parties submit that the Transaction will not raise competition concerns in the
        market for PU sealants for DIY/consumers in France because it will lead to a
        marginal increment in market share (around [0-5]%). The combined entity will
        continue to face significant competition from numerous competitors, in particular
        price pressure from private label brands offered by distributors.
(133) Additionally, the Parties claim that customers have significant buyer power and
        can easily switch suppliers. The Parties add that barriers to enter the market are
119 Commission Decision in Case M.7465 – Arkema/Bostik (2015), recital 11; Commission Decision in
    Case M.4941 – Henkel/Adhesives & Electronic Business (2008), recitals 38-58; Commission Decision
    in Case M.3612 – Henkel/Sovereign (2004), recitals 36-42.
120 Commission Decision in Case M.8152 – Arkema/Den Braven (2016), recitals 41-43.
121 Form CO, paragraph 107.
122 Questionnaire to Competitors (France) – Q1, question 28; Questionnaire to Customers (France) – Q2,
    question 26.
                                                      27
 ---pagebreak---  ---pagebreak---         However, the market investigation did not fully support this claim. The majority
        of competitors that expressed a view supported the Parties’ claim; but the
        majority of responsive customers did not.126
(139) Concerning customers’ buyer power, the results of the market investigation
        confirm the Parties’ views, the majority of competitors that expressed a view
        indicated that customers have some degree of buyer power. 127 Similarly, the
        majority of customers that expressed a view indicated that they have negotiating
        power over either or both Party(ies).128
(140) With regard to barriers to entry, the results of the market investigation do not
        support the Parties’ views according to which competitors can quickly enter the
        market due to low barriers to entry.
(141) A majority of competitors that expressed a view considered that new players
        could not establish a market presence without incurring significant investments
        and the majority of customers that expressed a view indicated that entry is not
        possible. Several barriers to entry were mentioned by participants to the market
        investigation, such as certifications, brand awareness and the presence of
        numerous competitors in the market.129
(142) However, according to the Parties, the set-up of production and distribution
        requires only small investments (approximately EUR 1 000 000) and can be done
        in a relatively short timeframe (approximately 1-2 years). Furthermore, according
        to the Parties, manufacturers of construction dry premix mortar such as Saint-
        Gobain (Weber), Mapei, PRB and Cermix/Desvres could be interested in offering
        PU sealants for DIY/consumers as an add-on to their product portfolio.130
(143) With regard to the impact of the Transaction, the majority of the respondents
        (customers and competitors) to the market investigation that expressed a view
        indicated that they would not expect changes in price, quality or product choice
        post-Transaction.131
(144) The Commission notes that the Transaction is unlikely to change significantly the
        market structure. Parex has a market share below [0-5]%. It does not produce
        these products and procures them from a third party. Post-Transaction,
        competitors in the market (more than four) are likely to continue exercising
        competitive pressure on the combined entity. Moreover, one of the barriers to
        entry mentioned in the market investigation was the presence of numerous
        competitors (see paragraph (141) above).
(145) Furthermore, in the French market for PU sealants for DIY/consumers, customers
        have buyer power.
126 Questionnaire to Competitors (France) – Q1, question 30; Questionnaire to Customers (France) – Q2,
    question 28.
127 Questionnaire to Competitors (France) – Q1, question 31.3.
128 Questionnaire to Customers (France) – Q2, question 29.
129 Questionnaire to Competitors (France) – Q1, question 32.3; Questionnaire to Customers (France) – Q2,
    question 30.
130 Parties’ response to the Commission’s request for information RFI 2, question 26.
131 Questionnaire to Competitors (France) – Q1, question 34.5; Questionnaire to Customers (France) –
    Q2, question 32.5.
                                                        29
 ---pagebreak--- (146) In conclusion, in light of the evidence available to it, the Commission considers
       that the Transaction does not raise serious doubts as to its compatibility with the
       internal market with regard to the market for PU sealants for DIY/consumers in
       France.
     4.5.   ETICS
(147) ETICS are on-site applied systems of prefabricated products for external wall
       insulation, usually composed of different types of façade mortars, insulation
       materials and glass fibre mesh fabrics. They enhance the thermal performance of
       buildings at a competitive cost and also serve an aesthetic function as they cover
       the external wall.
            4.5.1.     Market definition
                       4.5.1.1.    Product market definition
                                  (a)   The Commission’s precedents
(148) In a previous decision, the Commission noted, as a result of its market
       investigation, that ETICS did not compete with other insulation systems.
       Similarly, ETICS could either be sold as separate components (component sales)
       or as a complete system (system sales). As system sales were most of the time
       guaranteed by a certification scheme, and thus provide additional advantages for
       the user, the Commission found that a switch of users would be unlikely and a
       separate market for ETICS is likely. The Commission, however, left the exact
       product market definition open.132
                                  (b)   The Parties’ views
(149) The Parties submit that the relevant product market should be the market for
       ETICS. They explain that their activities only overlap in Spain where they almost
       exclusively sell ETIC as systems. 133
                                  (c)   The Commission’s assessment
(150) In the market investigation, the majority of respondents (customers and
       competitors) that expressed a view confirmed that ETICS are different from other
       insulation systems134 and a distinction should be done between component sales
       and system sales (see paragraph (148) above).135
(151) In line with previous Commission decisions and considering the information
       provided by the Parties and the results of the market investigation, the
       Commission is of the view that ETICS should be considered as a separate product
       market for assessing the Transaction.
132 Commission Decision in Case M.4898 – Compagnie de Saint-Gobain/Maxit (2008), recital 144.
133 Form CO, paragraph 92.
134 Questionnaire to Competitors and Customers (Spain) – Q3, question 6.
135 Questionnaire to Competitors and Customers (Spain) – Q3, question 7.
                                                     30
 ---pagebreak---                        4.5.1.2.    Geographic market definition
                                  (a)   The Commission’s precedents
(152) In a previous decision, the Commission considered that the markets for ETICS
       were national due to specific national building regulations and transportation
       costs.136
                                  (b)   The Parties’ views
(153) The Parties submit that the competitive assessment should be conducted on a
       national basis. They explain that their activities in ETICS only overlap in
       Spain.137
                                  (c)   The Commission’s assessment
(154) In the market investigation, the majority of respondents (customers and
       competitors) that expressed a view agreed with the Commission’s previous
       analysis of competition on a country-by-country basis.138
(155) In line with previous Commission decisions and considering the information
       provided by the Parties and the results of the market investigation, the
       Commission is of the view that, for assessing the Transaction, the relevant
       geographic market for ETICS is national in scope.
            4.5.2.     Competitive assessment
(156) The overlap between the Parties’ activities in ETICS gives rise to an affected
       market in Spain.
(157) The Parties also produce and sell in Spain façade dry premix mortar, which is a
       minor component of ETICS, but they do not produce or sell the main ETICS
       components i.e. insulation materials and glass fibre mesh. This vertical
       relationship does not give rise to an affected market since the Parties’ individual
       and combined market shares in the (upstream) market for façade dry premix
       mortar in Spain is below [5-10]% and their individual and combined market
       shares in the (downstream) market for ETICS in Spain are below [20-30]%.139
                       4.5.2.1.    The Parties’ views
(158) The Parties submit that the Transaction will not raise competition concerns
       because the Parties’ combined market will be lower than [20-30]% and the
       Transaction will lead to a small market share increment ([0-5]%). Moreover, the
       combined entity will face significant competition from numerous competitors.
(159) The Parties claim that customers have significant buyer power and can easily
       switch suppliers. The Parties add that barriers to enter the market are low and
136 Commission Decision in Case M.4898 – Compagnie de Saint-Gobain/Maxit (2008), recital 145.
137 Form CO, paragraph 94.
138 Questionnaire to Competitors and Customers (Spain) – Q3, question 8.
139 Form CO, Tables 6 and 15.
                                                     31
 ---pagebreak---  ---pagebreak---        million).141 The Commission notes that, according to the Parties, Sika entered the
       Spanish market for ETICS in 2015.142
(165) Concerning production capacity, the market investigation confirmed the existence
       of spare capacity in the market for ETICS in Spain.143
(166) With regard to the impact of the Transaction, the majority of the respondents
       (customers and competitors) to the market investigation that expressed a view
       indicated that post-Transaction they would expect no changes with regard to
       prices and an increase in quality and product choice.144
(167) In conclusion, in light of the evidence available to it, the Commission considers
       that the Transaction does not raise serious doubts as to its compatibility with the
       internal market with regard to the market for ETICS in Spain.
5.     CONCLUSION
(168) 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
141 Questionnaire to Competitors and Customers (Spain) – Q3, question 12.
142 Form CO, paragraph 240.
143 Questionnaire to Competitors and Customers (Spain) – Q3, question 13.
144 Questionnaire to Competitors and Customers (Spain) – Q3, question.15.
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