CELEX: 31995M0531
Language: en
Date: 1995-02-03 00:00:00
Title: COMMISSION DECISION of 03/02/1995 declaring a concentration to be compatible with the common market (Case No IV/M.531 - Recticel / CWW - Cerko Akustik ) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31995M0531

COMMISSION DECISION of 03/02/1995 declaring a concentration to be compatible with the common market (Case No IV/M.531 - Recticel / CWW - Cerko Akustik ) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 187 , 21/07/1995 P. 0010

 COMMISSION DECISION of 03/02/1995 declaring a concentration to be compatible with the  common market (Case No IV/M.531 - Recticel SA / CWW-Cerko AKUSTIK) according to Council  Regulation (EEC) No 4064/89  (Only the English text is authentic).  The paper version of the decision is available through the sales offices of the Office of Official  Publications of the European Communities. PUBLIC VERSION MERGER PROCEDURE ARTICLE 6(1)(b) DECISION To the notifying parties Dear Sirs, Subject:<ind> Case No.IV/M.531-RECTICEL SA/CWW-GERKO AKUSTIK GmbH & Co KG <ind> <ind> Notification of 22 December 1994 pursuant to Council Regulation (EC) No. 4064/89  1<ind> On 22 December 1994 Recticel SA and CWW-Gerko Akustik GmbH & Co KG notified to  the Commission their intended conversion of Celulalo SA into a joint venture under their joint  control which will operate under the name CWW Iberica. 2<ind> After examination of the notification the Commission has concluded that the notified  operation falls within the scope of application of Council Regulation 4064/89 and does  not raise  serious doubts as to its compatibility with the common market and the functioning of the EEA  Agreement. <ind> THE PARTIES  3<ind> Recticel SA, ultimately owned by Compagnie de Suez SA is a Belgian company which is  active in Europe and North America.  Its product is polyurethane foam for use in various industrial  applications.  Celulalo  is at present a wholly owned subsidiary of Recticel.  It is a Spanish company  which supplies components to the automotive sector, including sound elimination systems based on  bituminous foil and other materials, and sound elimination material for use in domestic electrical  goods such as washing machines and spin dryers whose action produces a high level of vibration. 4<ind> CWW-Gerko, incorporated in Germany, is a member of the Ruhrkohle group and has as its  main activity the supply of sound elimination systems to the automobile industry, including sound  absorption sheets based on bituminous foils, and sound elimination material for use in domestic  electrical goods such as those described above. <tab> II<ind> THE OPERATION 5<ind> Recticel will transfer to CWW-Gerko 50 per cent of the shares in Celulalo.  CWW-Gerko  will contribute to Celulalo know-how and intellectual property rights and all its existing business in  Spain and Portugal relating to the products of the resulting joint venture.  The operation  compensates deficiencies at present suffered by Recticel and CWW-Gerko:  Celulalo has production  facilities in Spain but an inadequate customer base, whereas CWW-Gerko has an adequate customer  base in Spain but no production facilities. <ind> III<ind> COMMUNITY DIMENSION 6<ind> The undertakings concerned have a combined aggregate worldwide turnover in excess of  5000 million ECU. Both the Suez and the Ruhrkohle groups have a Community-wide turnover in  excess of 250 million ECU, but do not achieve more than two-thirds of their aggregate Community- wide turnover within one and the same Member State. The notified operation therefore has a  Community dimension. <ind> IV<tab> CONCENTRATIVE JOINT VENTURE 7<ind> The notified operation constitutes a concentration within the meaning of Article 3(1)b of the  Regulation. <ind> Joint control 8<ind> The administrative structure of Celulalo is set out in the joint venture agreement.  Recticel  and CWW-Gerko will be equally represented not only in the shareholders meeting but also on the  board of directors.  The chairman of the board of directors will be appointed by CWW-Gerko and  will have a casting vote except in the circumstances described below.  The ordinary management of  the company will be conducted by an executive committee of the board of directors, again composed  equally of Recticel and CWW-Gerko representatives, assisted by a general manager who must in  practice be a Recticel nominee. 9<ind> The most important powers of management are vested in the board of directors.  The  chairman cannot exercise his casting vote in the case of important decisions such as the approval of  the business plan, the approval of investment in excess of specified limits and exemptions to CWW- Gerko's obligation to refer all its customers to Celulalo. 10<ind> The operation accordingly confers upon Recticel and CWW-Gerko joint control of <tab>  Celulalo. <ind> Full-function joint venture 11<ind> The joint venture will perform on a lasting basis all the functions of an autonomous  economic entity.  Indeed it will continue to operate as it does now.  It is established for an indefinite  duration, subject to specified events.Although it may benefit from framework contracts between  CWW-Gerko and automobile manufacturers Celulalo will sell not to its parents but to such  manufacturers. <ind> Absence of coordination 12<ind> Independently of Celulalo Recticel is not active on the market of the joint venture.  Thus,  although CWW-Gerko will remain active on that market, the joint venture provides no opportunity  for cooperation between Recticel and CWW-Gerko. <ind> V<ind> COMPATIBILITY WITH THE COMMON MARKET <ind> a)<tab> Relevant product markets 13<ind> Celulalo supplies sound elimination systems to the automotive industry.  It also  manufactures sound absorption sheets based on bituminous foil and supplies them to manufacturers  of domestic electrical products.  The purpose of each of these products is to reduce vibration and  thereby sound. 14<ind> Automobile manufacturers use bituminous foil and in addition two other forms of sound  elimination  - sheets composed of EPDM (a hard plastic) which disperse sound waves, and materials  such as polyurethane foam and cotton felt which absorb the sound.  Each of these three products is  installed at different points in a vehicle, depending upon their suitability. A vehicle manufacturer  purchases an appropriate system from a single supplier.  Celulalo acquires EPDM sheets,  polyurethane foam and cotton felt for onward supply.  Accordingly Celulalo is a supplier of such  systems and such systems constitute one of the relevant product markets. 15<ind> The other relevant product market consists of sound elimination materials for domestic  electrical products. <tab> b)<ind> Geographical reference markets 16<ind> Motor vehicle manufacturers often have production facilities throughout the European  Union but make their arrangements for the acquisition of components centrally with the intention of  reducing transaction costs.  In the absence of barriers to trade between member states they incline to  source components on an EU wide-basis.  Sound elimination systems are similar to other  components in this respect.  Accordingly the geographic reference market for the products is  probably at least the EU.  Since however even on the narrowest basis no competition problem arises  the definition of the geographical reference market can be left open. 17<ind> For similar reasons manufacturers of domestic electrical products source centrally  throughout the EU.  In the absence of any competition problem on the narrowest market definition in  relation to these products also it is unnecessary to reach a conclusive definition of the geographic  reference market;  but it can be argued that the market extends at least as wide as the EU. <tab> c)<tab> Competitive assessment 18<ind> The only member state of the EU or EFTA in which both Recticel/Celulalo and CWW- Gerko supply automotive sound elimination systems is Spain.  Here their combined market share is  [Deleted Business secret. Between 5% and 20%.] .  In the EU the joint venture will have a market  share of [Between 5% and 20%.] and in the EEA [Between 5% and 20%.] .  The market share in  Spain is considerably lower than the largest supplier ((Saifa Keller (Unikeller) - [Between 50 and  65%.].  In the EU there are four competitors with larger market shares.  The vehicle manufacturers  enjoy significant bargaining power. 19<ind> There is no member state of the EU or EFTA  where the activities of the parties in the  supply of sound elimination material for domestic electrical products coincide.  <tab> In the EU  their combined market share will be [Between 20 and 35%.] and in the EEA [Between 5 and 20%.].  In neither market will they be the largest supplier (again Unikeller - [Between 20 and 35%.] of the  EU and the EEA).  Again the bargaining power of the manufacturers is significant. 20<ind> The operation accordingly neither creates nor strengthens a dominant position in the supply  of sound elimination systems for motor vehicles or in the supply of sound elimination materials for  domestic electrical products.  Nor does it raise any competitive concerns about the acquisition of  supplies for such systems. <ind> VI<ind> ANCILLARY RESTRAINTS 21<ind> The notifying parties have requested that a restriction in the agreement creating the joint  venture be considered as ancillary to the concentration.  This effect of the relevant provision is that  CWW-Gerko grants to Celulalo an exclusive right to use technical  information and to manufacture  sound elimination materials for the automotive and household industries.  CWW-Gerko remains  active on the relevant product market.  In these circumstances an exclusive licence is equivalent to  an assignment  The grant of these rights is necessary to the implementation of the concentration  because CWW-Gerko's expertise is an essential element for its success.  The restriction is  accordingly ancillary to the concentration. <ind> VII<ind> CONCLUSION 22<ind> For the foregoing reasons the proposed concentration does not raise serious doubts as to its  compatibility with the common market and with the functioning of the EEA Agreement. For the above reasons, the Commission has decided not to oppose the notified operation and to  declare it compatible with the common market and with the functioning of the EEA Agreement.  This decision is adopted in application of Article 6(1)(b) of Council Regulation No. 4064/89. For the Commission