CELEX: 31994M0504
Language: en
Date: 1994-10-20 00:00:00
Title: COMMISSION DECISION of 20/10/1994 declaring a concentration to be compatible with the common market (Case No IV/M.504 - Avesta III) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31994M0504

COMMISSION DECISION of 20/10/1994 declaring a concentration to be compatible with the common market (Case No IV/M.504 - Avesta III) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 326 , 24/11/1994 P. 0004

 COMMISSION  DECISION of 20/10/1994 declaring a concentration to be compatible with the common market (Case No IV/M.504  - Avesta III) 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 party Dear Sirs, Subject:<tab> Case No. IV/M.504  AVESTA (III) <tab>  <HdTab>Your  notification of 19.09.1994  pursuant  to Article 4 of Council Regulation No. 4064/89. 1.<tab>  The proposed operation concerns the acquisition  by British  Steel   of a further 9.9% of the   shareholding  of Avesta Sheffield AB (ASAB) taking its shareholding to 49.9%. The operation was notified to the Commission on 19 September 1994  pursuant to Article 4 of Council Regulation  (EEC)  No 4064/89. 2.<tab> After examination of the notification the Commission has  concluded that the notified operation falls within  the scope  of  application of Council Regulation No 4064/89  and does  not raise serious doubts as to its compatibility  with the common market. THE OPERATION 3.<tab>  On  4 August 1992, British Steel plc (BS),  NCC  AB (NCC),  Axel  Johnson  HAB  and AGA  AB  (AGA)  notified  an operation  to  the Commission by which they formed  a  joint venture,  Avesta  Sheffield  AB  from  the  stainless  steel manufacturing   activities  of  Avesta   AB,   whose   major shareholders  NCC, Axel Johnson and AGA, and  British  Steel were parties to a shareholders' agreement. 4.<tab>  On  4  May 1994, BS, NCC and AGA  notified  to  the Commission  the operation by which Axel Johnson disposed  of its  shareholding.  The Axel Johnson shares were placed with Swedish investors. The shareholders' agreement continued  to operate among the three remaining parties. 5.<tab>   On   14  August  1994,  NCC  withdrew   from   the shareholder's agreement and decided to dispose  of  its  22% shareholding  in  ASAB.   The  shareholders  agreement   was subsequently terminated by the  British Steel and AGA. 6.<tab>  On  19 September 1994, British Steel  notified  the operation  by which it acquires from Barclays de Zoete  Wedd Securities (BZW), NCC's brokerdealer, 9.9% of ASAB's  issued share  capital  previously held by NCC. The rest  of   NCC's shares  have  been  placed with several  institutions  which belong to various member States and EFTA States. THE PARTIES 7.<tab>  BS is a British steel manufacturer created in  1988 by the privatisation of the British Steel Corporation.   NCC is  principally involved in the contracting and real  estate sector  in Sweden.  AGAis a Swedish company involved in  the supply of industrial and medical gases. 8.<tab> ASAB, a Swedish company, is the operating parent  of the  Avesta  group which is involved in the manufacture  and sale of certain stainless steel products.  CONCENTRATION 9.<tab>  As  a  result  of  the operation  described  above, British  Steel will hold a 49.9% stake in ASAB. The rest  of ASAB's   shareholding  will  be  widely  dispersed  and   no shareholder's agreement will continue to be in operation. <tab>  In view of this 49.9% shareholding of British  Steel, and  taking  into  account the dispersion of  the  remaining shareholders,  the Commission considers that  British  Steel will enjoy sole control over ASAB. 10.<tab>  Moreover,  at  the last shareholder's  meeting  of ASAB,  British Steel, with 40% of the issued share  capital, held  52.4%  of  the votes of those present or  represented. Assuming  the  same level of attendance at future  meetings, British Steel's 49.9% shareholding would confer 65.6% of the votes  of  those present or represented. Indeed,  given  the further   dispersal   of   ASAB's  remaining   shareholding, following  NCC's exit, it is extremely likely  that  British Steel  would hold, at least, a majority of the votes in  any future shareholder's meeting. 11.<tab> It is also very likely that British Steel  will  be able  to  control ASAB's board of directors as  well.  As  a matter of the Swedish law, any owner of more than 10% of the share   capital  can  call  an  extraordinary  shareholder's meeting  with a view to proposing a new board. Under  ASAB's articles  of  asssociations, the vote is  to  be  by  simple majority,  unless  holders of at least  10%  of  the  shares request the special voting procedure provided for in article 6 of ASAB's article of association to apply. <tab>  Under  the special voting procedure, if a shareholder votes  for  several  candidates, it shall  split  its  votes equally  between  each  candidate.  On  the  asumption  that British  Steel  would  hold [...] (this  figure  would  vary depending on the attendance at ASAB's AGM) of the  votes  of the  presents  and  represented, the remaining  shareholders could  not prevent it from obtaining a majority in the board even  in the unlikely situation where they would all  engage in a concerted action against British Steel. 12.<tab>  Thus  the operation results in the acquisition  by British  Steel  of  sole  control on  ASAB  and  constitutes therefore a concentration within the meaning of Article 3 of the Merger Regulation. COMMUNITY DIMENSION 13.<tab>  The  operation  has a  Community  dimension.   The worldwide turnover of all undertakings concerned amounts, in their  respective last financial year, to  more  than  5,000 million ECU.  The Community wide turnover of each of BS  and ASAB exceeds 250 million ECU.  The undertakings concerned do not   achieve  more  than  two  thirds  of  their  aggregate Community  wide  turnover within one  and  the  same  Member State. COMPATIBILITY WITH THE COMMON MARKET Relevant product and geographical markets 14.<tab>  In its previous decisions, the Commission  defined the  relevant  product markets as the market  for  stainless steel  products and the market for the distribution of those products.  Only those products covered by the Treaty of Rome (which  in  the case of ASAB were cold rolled flat  products less than 500 mm wide and welded tubes) were covered by that decision.   As far as the geographical market is  concerned, the  Commission stated that the former market was  at  least Community wide and it left open the precise definition as to whether  the latter market was national or regional  as  the competition analysis was unaltered even if a stricter market definition was used. Assessment 15.<tab>  As  the whole of the Stainless Steel  business  of British  Steel was already merged in ASAB since 1992,  there will  be  no change in the structure of the company  or  its market  share ([...] business secret deleted, between  1015% and  [...] business secret deleted, between 1520% of the EEA sales  of  respectively  cold rolled  stainless  steel  flat products  and welded stainless steel tubes) as a  result  of the acquisition of sole control by British Steel. Therefore, the  operation  does  not  lead to any  addition  of  market share. 16.<tab>  A change from joint to sole control may also  have implications  for competitive conditions, in  particular  as far as the vertical and conglomerate effects are concerned. <tab> As regards the former, British Steel's stainless steel facilities  as  well  as  distribution  network  have   been combined  with  ASAB's operations as a result  of  the  1992 agreement.  The  impact  of  this vertical  integration  was evaluated  in  the  decision of the Commission  n   IV/M.239 Avesta/British Steel. <tab>  As  regards  the latter, in both  markets,  it  faces competition from large stainless steel companies  which  are also integrated in large international groups. Some of these competitors  belong  to  steel  groups  like  ASAB  such  as ThyssenKruppHoechst,  Ugine  (belongs   to   Usinor),    AST (belongs  to  Ilva  and  is  currently  in  a  privatisation process). 17.<tab>  For the above reasons, the concentration will  not strengthen or create a dominant position in EEA territory or a substantial part of it. CONCLUSION 18.<tab>  For  the above reasons the proposed  concentration does  not raise serious doubts as to its compatibility  with the common market. 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.  The application of Regulation (EEC) 4064/89 is without prejudice to  the applicability of the provisions of Articles 92 to 94 of the Treaty. <tab> For the Commission