CELEX: 32021M10353
Language: en
Date: 2021-10-12 00:00:00
Title: Commission Decision of 12/10/2021 declaring a concentration to be compatible with the common market (Case No COMP/M.10353 - GRAPHIC PACKAGING HOLDING COMPANY / AR PACKAGING GROUP) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                Brussels, 12.10.2021
                                                                C(2021) 7471 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                                                                 information omitted has been replaced by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.
                                                                Graphic Packaging International Europe
                                                                Holdings B.V.,
                                                                c/o Graphic Packaging Holding Company
                                                                1500 Riveredge Pkwy NW, Ste 100, 9th
                                                                Floor
                                                                GA 30328 Atlanta
                                                                United States of America
Subject:             Case M.10353 – GRAPHIC PACKAGING HOLDING COMPANY /
                     AR PACKAGING GROUP
                     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 7 September 2021, the European Commission received notification of a proposed
           concentration pursuant to Article 4 of the Merger Regulation by which Graphic
           Packaging International Europe Holdings B.V., (‘GPK’ or ‘Notifying Party’) intends
           to acquire, within the meaning of Article 3(1)(b) EUMR, sole control over AR
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 (the ‘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’).
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---         Packaging Group AB (‘ARP’, and together with GPK, the ‘Parties’) by way of
        acquisition of shares.3
1.      THE PARTIES
(2)     GPK is part of a corporate group headed by Graphic Packaging Holding Company, a
        US-headquartered global manufacturer and provider of paperboard and sustainable
        paper-based packaging solutions for a wide variety of customers. GPK is active both
        in the production of cartonboard from its production mills in the US, and in the
        converting of cartonboard into various packaging solutions for a wide range of
        customers.
(3)     ARP is headquartered in Lund, Sweden, and is a global provider of sustainable fibre-
        based packaging solutions for the food and consumer goods, beauty and cosmetic,
        confectionary, food service, tobacco, the pharmaceutical and medical industries.
2.      THE TRANSACTION
(4)     Pursuant to a share purchase agreement signed on 12 May 2021, GKP will acquire
        100% of the shares in ARP (the ‘Transaction’). Upon completion of the Transaction,
        GPK will exercise sole control over ARP within the meaning of Article 3(1)(b) of
        the Merger Regulation.
3.      UNION DIMENSION
(5)     The undertakings concerned have a combined aggregate worldwide turnover of more
        than EUR 5 000 million [in 2020, GPK: […]; ARP: […]]4 . Each of them has a
        Union-wide turnover in excess of EUR 250 million [in 2020, GPK: […]; ARP: […]],
        but they do not achieve more than two-thirds of their aggregate Union-wide turnover
        within one and the same Member State. The notified operation therefore has a Union
        dimension pursuant to Article 1(2) of the Merger Regulation.
4.      RELEVANT M ARKETS
(6)     The Parties’ activities overlap horizontally with regard to the supply of folding
        cartonboard packaging. Both Parties also have a small presence in the supply of
        packaging machinery to customers in the EU, but as it does not give rise to an
        affected market under any plausible product or geographic market definition it is not
        dealt with in this Decision.5
(7)     GPK is also active in the upstream market of producing paperboard. However, the
        Parties do not have a vertical relationship, GPK does not have any paperboard sheet
        production activities in the EEA and it does not sell to third party converters in the
3   Publication in the Official Journal of the European Union No C 400, 4.10.2021, p. 4, and Corrigendum in
    OJ C 405, 7.10.2021, p. 11.
4   Turnover calculated in accordance with Article 5 of the Merger Regulation .
5   The Parties’ combined market share in the narrowest plausible market is below 10%. Form CO, paragraph
    11 and response of 7/10/2021 to Request for Information 4.
                                                          2
 ---pagebreak---           EEA.6 This Decision will therefore focus solely on the impact of the Transaction on
          the supply of folding cartonboard packaging.
4.1.      Product market definition
(8)       Converting paperboard7 into cartonboard packaging products involves the printing,
          folding, gluing and often laminating / coating of pre-ordered sheets of paperboard
          and cutting the board into carton blanks. The carton blanks also incorporate creases,
          which enable the carton to be formed for packaging the customer’s product. 8 Folding
          cartonboard packaging is sold to producers of food and non-food consumer products
          to be used to pack a wide range of products belonging to different end-use
          segments.9 A form of cartonboard packaging is microflute, which is a type of
          corrugated cartonboard used for transport and display purposes at the point of
          sales.10
(9)       The Parties’ activities in folding cartonboard packaging overlap in the EEA only
          with respect to certain end-use applications: (i) beverages, (ii) food, (iii) healthcare,
          (iv) personal care and (v) other non-food. None of the Parties is active in the supply
          of cartonboard packaging with microflutes in the EEA.
4.1.1. The Commission’s previous decisions
(10)      In its previous decisions, the Commission has considered the possibility of sub-
          segmenting the folding cartonboard packaging market by end-use application. For
          instance, it has considered that folding cartonboard for tobacco, for
          pharmaceutical/medical products or for beverages might constitute distinct markets.
          However, the market definition has ultimately been left open. 11 The Commission’s
          previous decisions have not addressed the relevance of the distinction between
          folding cartonboard with and without microflutes for product market definition
          purposes.
(11)      Moreover, within beverages, the Commission has considered in its previous
          decisions the possibility of distinguishing between (i) rigid boxes used for the
          packaging of premium beverages, and (ii) multipack cartons used for packaging
          beer, cider or soft drinks. However, the market definition has ultimately been left
          open.12
6    [Sales policy/strategy] (see Form CO, footnote 36). GPK’s market share on the hypothetical worldwide
     production of paperboard would also be very limited [5-10]% (see Form CO, footnote 141).
7    The industry usually distinguishes between four main categories of paperboard: solid bleached sulphate
     (SBS), coated natural kraft (CNK or CUK), folding box board (FBB) and white lined chipboard (WLC or
     CRB) (Form CO, paragraph 88).
8    Form CO, paragraph 91.
9    Form CO, paragraph 107.
10 Form CO, paragraph 92. According to some customers, folding cartonboard packaging without
     microflutes is used to pack the product and is the unit purchased and that the consumer “touches”. By
     contrast, microfluted cardboard is a packaging unit which typically contains multiple cartons: it is used for
     display purposes on shelf at the point of sale (see minutes of DG COMP calls of 30 August 2021 with a
     customer and of 3 September 2021 with a competitor).
11 Cases M.5599 – AMCOR / ALCAN, paragraphs 44-45, and M.8421 – WESTROCK / MPS, paragraphs
     12-18.
12 Case M.8421 – WESTROCK / MPS, paragraphs 12-18.
                                                          3
 ---pagebreak--- 4.1.2. The Notifying Party’s views
(12)    The Parties propose to leave open the product market definition, since no concerns
        would arise even under the narrowest plausible segmentation. 13 In any case, the
        Parties submit that microflutes should be included in the overall folding cartonboard
        packaging market, as there is high level of substitutability between microflutes and
        other cartonboard packaging.14
4.1.3. The Commission’s assessment
(13)    The market investigation supports the Commission’s previous practice of
        considering the possibility of sub-segmenting the folding cartonboard packaging
        market by end-use application. The majority of respondents to the market
        investigation agreed with this segmentation.15 Within beverages, the majority of
        respondents also indicated that suppliers tend to be specialised and supply either
        rigid boxes for premium beverages or multi-pack cartons for beers or soft drinks.16
        Finally, with regard to possible further sub-segmentation (e.g. sub-segmenting the
        supply of folding cartonboard packaging for food into the supply to the retail sector
        and to the foodservice sector or by type of product) a majority of respondents also
        considered that, generally, and as regards the end-applications where the Parties
        overlap, no further sub-segmentation is necessary.17
(14)    As regards microflutes, the market investigation was inconclusive: the majority of
        customers who responded to the market investigation replied that they do not use
        microflutes for the packaging they purchase for their products18 but that microflutes
        can be replaced with folding cartonboard without microflute (and vice versa) in
        certain situations.19 The majority of competitors who responded to the market
        investigation indicated that they manufacture both microflutes and cartonboard
        without microflutes20 , though the responses were inconclusive regarding the degree
        to which there is supply-side substitutability.21
(15)    In any event, for the purposes of this Decision, it can be left open whether the
        folding cartonboard market should be sub-segmented according to end-use
        applications or whether a distinction would be appropriate between packaging with
        or without microflutes, as the Transaction does not raise serious doubts as to its
        compatibility with the internal market even under the narrowest market definition.
        Therefore, the Commission will analyse the impact of the Transaction on the folding
        cartonboard market, distinguishing by end-application (and in beverages,
13  Form CO, paragraph 111.
14  Form CO, paragraphs 93-96. The Notifying Party submits that microflute packaging is produced on the
    same machinery as other cartonboard packaging, using the same print, cut and glue assets, but then
    requires an additional stage of lamination which requires an additional piece of equipment.
15  See replies to question 3 in both Questionnaire Q1 to Customers and Questionnaire Q2 to Competitors.
16  See replies to question 4 in both Questionnaire Q1 to Customers and Questionnaire Q2 to Competitors.
17  See replies to questions 6, 9, and 12 in Questionnaire Q1 to Customers , and replies to questions 7, 10, and
    13 in Questionnaire Q2 to Competitors .
18  See replies to questions 7, 10, and 13 in Questionnaire Q1 to Customers .
19  See replies to questions 8, 11, and 14 in Questionnaire Q1 to Customers .
20  See replies to questions 8, 11, and 14 in Questionnaire Q2 to Competitors.
21  See replies to questions 9, 12, and 15 in Questionnaire Q2 to Competitors.
                                                           4
 ---pagebreak---           considering narrower segments including only soft drinks) and in all cases
          presenting the narrowest segment excluding microflutes.22
4.2.      Geographic market definition
(16)      The Commission’s decisional practice has been to leave open whether the scope of
          the market for folding cartonboard packaging is national or EEA-wide.23
(17)      The Notifying Party submits that cartonboard packaging is often transported across
          national borders and that customers typically purchase their requirements from
          suppliers in other European countries,24 which would indicate that the market is open
          for competition from cross-border suppliers located within and outside the EU.25
(18)      The results from the market investigation were inconclusive. The majority of
          competitors responded that they would consider selling folding cartonboard
          packaging in an area wider than the EEA. 26 However, the majority of customers
          responded that they would consider purchasing folding cartonboard packaging on a
          regional basis (i.e. nationally and neighbouring countries). 27
(19)      In any event, the precise geographic scope of the market may be left open since the
          Transaction does not raise serious doubts as to its compatibility with the internal
          market or the functioning of the EEA Agreement regardless of the geographic
          market definition adopted. The Commission will analyse the impact of the
          Transaction at national, regional (e.g. Western Europe) and EEA level.
(20)      The Transaction would give rise to affected markets only in the following plausible
          product and geographic markets: (i) supply of folding cartonboard for soft drinks in
          the EEA; (ii) supply of folding cartonboard for soft drinks in Western Europe; (iii)
          supply of overall folding cartonboard packaging in Croatia; (iv) supply of overall
          folding cartonboard packaging in Spain; (v) supply of folding cartonboard for
          personal care products in Germany; (vi) supply of folding cartonboard for personal
          care products in Poland; and (vii) supply of folding cartonboard packaging for food
          products in Spain.28 The conditions of competition and the position of the Parties are
          similar in each of these plausible markets.
5.        COMPETITIVE ASSESSMENT: HORIZONTAL NON-COORDINATED EFFECTS
(21)      According to the Commission’s Guidelines on the assessment of horizontal mergers
          under the Council Regulation on the control of concentrations between undertakings
          (“Horizontal Merger Guidelines”),29 mergers between actual or potential competitors
22   In the absence of any indication, market shares on this Decision are to be understood as excluding
     microflutes. Market shares including microflutes will also be presented, when available.
23   Cases M.5599 – AMCOR / ALCAN, paragraphs 49, M.8421 – WESTROCK / MPS, paragraphs 29-35,
     and M.10122 - MAYR-MELNHOF KARTON / KOTKAMILLS GROUP, paragraphs 43-45.
24   Form CO, paragraph 130.
25   Form CO, paragraph 131.
26   See replies to questions 17, 20 and 23 of Questionnaire Q2 to Competitors.
27   See replies to questions 18, 21 and 24 of Questionnaire Q1 to Customers .
28   In all cases, excluding microflutes.
29   OJ C 31, 05.02.2004.
                                                           5
 ---pagebreak---          can result in horizontal non-coordinated effects which are harmful to competition. 30
         The Horizontal Merger Guidelines list a non-exhaustive number of factors which can
         influence whether or not significant horizontal non-coordinated effects are likely to
         result from a merger, such as the large market shares of the merging firms, the fact
         that the merging firms are close competitors and the limited possibilities for
         customers to switch suppliers.31
5.1.1. The Notifying Party’s views
(22)     The Notifying Party submits that the Transaction will not give rise to concerns in
         any of the potentially affected markets for the following reasons:32 first, the market
         share increment would be very limited; second, strong competitors would remain in
         a fragmented market;33 third, multi-sourcing is common in the market, customers
         frequently switch provider to minimise prices and barriers for switching are de
         minimis;34 fourth, there are limited barriers to entry and expansion;35 fifth, customers
         are large and sophisticated purchasers (such as […] etc.) who exert significant buyer
         power; and sixth, the Parties are not close competitors as they focus on different
         customer groups / locations.
5.1.2. The Commission’s assessment
(23)     On the basis of the information available to it and in light of the results of the market
         investigation, the Commission considers that the Transaction is unlikely to raise
         competition concerns, for the following reasons.
(24)     First, market shares remain relatively moderate post-merger in most of the plausible
         markets and in any event the market share increments are always minimum or
         negligible.36
30  See Horizontal Merger Guidelines, paragraph 24: “A merger may significantly impede effective
    competition in a market by removing important competitive constraints on one or more sellers who
    consequently have increased market power. The most direct effect of the merger will be the loss of
    competition between the merging firms. For example, if prior to the merger one of the merging firms had
    raised its price, it would have lost some sales to the other merging firm. The merger removes this
    particular constraint. Non-merging firms in the same market can also benefit from the reduction of
    competitive pressure that results from the merger, since the merging firms’ price increase may switch
    some demand to the rival firms, which, in turn, may find it profitable to increase their prices. The
    reduction in these competitive constraints could lead to significant price increases in the relevant
    market”.
31  Horizontal Merger Guidelines, paragraph 26 et seq.
32  Form CO, paragraphs 233 – 261.
33  The Notifying Party submits that the merged entity would continue to face significant competition from
    multinational converters active across the EU (such as Mayr-Melnhof, MPS/WestRock, DS Smith, Van
    Genechten, and others), as well as a range of smaller, local converters (for example, Seda, Autajon,
    Hinojosa Packaging, Dot 2 Dot, and others).
34  According to the Notifying Party, multi-sourcing gives customers access to alternative providers at little to
    no delay, switching costs are typically borne by the new provider rather than by the customer, and
    suppliers will not typically be guaranteed a fixed volume of work from customers, so there is no penalty
    for a customer looking to shift production between existing providers .
35  Providers are, according to the Notifying Party, able to switch production easily between end-user
    segments as the base raw material is the same.
36  The Notifying Party has presented market shares estimates under two different sources: the industry report
    “The Future of Folding Cartons to 2026” published by Smithers Pira (“Pira”) and the industry report
    “European Carton Prospects 2019 Edition” prepared by NOA-PRISM for the European Carton Makers
                                                          6
 ---pagebreak---           (i)    In the supply of folding cartonboard packaging for soft drinks in the EEA,37
                 GPK’s market share is [20-30]% and ARP’s market share is less than [0-5]%,
                 resulting in a combined market share of [20-30]%.38 The Parties’ main
                 competitors are MPS/WestRock, with a [20-30]% market share, Mayr-
                 Melnhof, with a [5-10]% market share, and Van Genechten, with a [0-5]%
                 market share. In other words, the Transaction would entail the merger of the
                 biggest player in this segment with one of the smallest, giving rise to a
                 negligible share increment. There would be one competitor whose market
                 share would be only just below that of the merged entity, and there would be
                 at least three competitors with market shares substantially higher than the
                 market share increment brought about by the Transaction.
          (ii)   In the supply of folding cartonboard packaging for soft drinks in Western
                 Europe39 the picture is relatively similar: GPK’s market share is [20-30]%
                 and ARP’s also less than [0-5]%, resulting in a combined market share of
                 [20-30]% post-Transaction.40 Again, the Parties’ main competitors are
                 MPS/WestRock, with a [10-20]% market share, Mayr-Melnhof, with a [5-
                 10]% market share, and Van Genechten, with a [0-5]% market share. In other
                 words, the Transaction would entail the merger of the biggest player in this
   Association (“Prism”). Prism data is based on production locations while Pira data is based on customer
   location (as defined by the location of the packer). This means that market sizes will differ due to the
   existence of imports and exports between countries or regions. While Pira does report major market
   participants in the industry, neither the Prism report nor Pira report publishes any detailed and precise data
   on individual market participants. As such, neither Party has any reliable, third-party information on the
   revenue or market share data of its competitors. Market share of competitors are therefore the Parties’
   estimates (see Form CO, paragraphs 150 and ff). Although Prism’s estimates of the overall market sizes
   are smaller (and the Parties’ shares are generally higher and thus more conservative), t he Commission
   agrees with the Parties that overall they seem to be less reliable, mainly because they only take into
   account local production in the region/country in question, but not the exports and imports out of and into
   the markets. More generally, the Commission considers not credible the size of some market segments
   estimated by Prism. For instance, Prism estimates the overall size in Germany of the soft drinks/beers
   segment (where it attributes to GPK a [90-100]% share and to APR a [0-5]% share) to be […] (vs […] by
   Pira) and of the beverages segment (GPK, [60-70]%; APR [0-5]%) to be […] (vs […] by Pira). By
   comparison, Prism estimates the size of food market in Germany to be […] and the beverage market in
   Poland at […].
   For this reason, the Commission will take into account in this decision the market size and share estimates
   based on Pira. In any case, the conclusions of the Commission would not change if the Prism estimates
   were taken into account: essentially there would be an additional affected market (beverages/soft
   drinks/beers in Germany) but three less (overall folding packaging in Croatia and Spain, personal care in
   Poland and food in Spain) and the market share increments would in any and all market segments be also
   negligible (always [0-5]% except [0-5]% in beverages in Germany).
37 The EEA figures corresponds to Pira’s “Total Europe” category, which includes a number of non -EEA
   countries and territories, i.e. it includes all EU Member States as well as the following: Albania, Andorra,
   Armenia, Azerbaijan, Belarus, Bosnia Herzegovina, Faroe Island, Georgia, Gibraltar, Greenland, Holy
   See, Kazakhstan, Kyrgyzstan, Liechtenstein, Macedonia, Moldova, Monaco, Norway, San Marino, Serbia,
   Svalbard and Jan Mayen Island, Switzerland, Tajikistan, Turkmenistan, Ukraine and Uzbekistan.
38 Form CO, Table 7 “EU – Pira – Breakdown of the Beverages segment in 2020”. Including microflutes,
   GPK’s share would be [10-20]% and ARP’s [0-5]%.
39 Pira’s “Western Europe” figures includes the following countries and territories: Andorra, Austria,
   Belgium, Cyprus, Denmark, Faroe Island, Finland, France, Germany, Gibraltar, Greece, Greenland, Holy
   See, Iceland, Ireland, Italy, Liechtenstein, Luxembourg, Malta, Monaco, Netherlands, Norway, Portugal,
   San Marino, Spain, Svalbard and Jan Mayen Island, Sweden and Switzerland.
40 Form CO, Table 13 “Table 13: Regions (Western and Eastern Europe) – Pira – Breakdown of the
   Beverages segment in 2020”. Including microflutes, GPK’s share is [10-20]% and ARP’s is less than [0-
   5]%.
                                                           7
 ---pagebreak---                  segment with one of the smallest, thus leaving the structure of supply almost
                 unaffected. There would be at least three competitors with market shares
                 substantially higher than the market share increment brought about by the
                 Transaction.
           (iii) In the overall supply of folding cartonboard packaging in Croatia, the Parties’
                 combined market share would only be [20-30]%. GPK’s presence is minimal,
                 with a market share of [0-5]%, whereas ARP’s market share is [10-20]%,
                 resulting in a combined market share of [20-30]%.41 The main competitors
                 are Lana-Karlovačka tiskara, with a [5-10]% market share, and Grafičar
                 Ludbreg, with a [5-10]% market share. The other competitors have market
                 shares lower than [0-5]%, which illustrates the high fragmentation of the
                 market. In other words, the Transaction would entail the merger of the
                 biggest player with, at best, the fifth player in this segment. There would be
                 at least three competitors with market shares higher than the market share
                 increment brought about by the Transaction.
           (iv) In the overall supply folding cartonboard packaging in Spain, the situation is
                 the contrary: GPK’s market share is [20-30]% and ARP’s market share is
                 only [0-5]%, resulting in a combined market share of [20-30]%.42 The
                 Parties’ main competitors are Essentra, with a [10-20]% market share,
                 Hinojosa Packaging, also with a [10-20]% market share, and Autajon, with a
                 [10-20]% market share. In other words, the Transaction would entail the
                 merger of the biggest player with one of the smallest. There would be at least
                 three competitors with market shares substantially higher than the market
                 share increment brought about by the Transaction.
           (v)   In the supply of folding cartonboard packaging for personal care products in
                 Germany, GPK’s market position is very limited, with only a [0-5]% market
                 share, whereas ARP’s market share is [20-30]%, resulting in a combined
                 market share of [20-30]%.43 Other competitors are Edelmann, with a [20-
                 30]% market share, Westrock, with a [10-20]% market share, Autajon, with a
                 [10-20]% market share, Mayr-Melnhof, with a [5-10]% market share, and
                 Van Genechten, with a [5-10]% market share.44 In other words, the
                 Transaction would entail the merger of the first and, at best, the seventh
                 player in this segment.45 There would still be three competitors with market
                 shares between 10% and 20% and at least five competitors with market
                 shares substantially higher than the market share increment brought about by
                 the Transaction.
41 Form CO, Table 20 “Croatia – overall paperboard converting activities in 2020”. Including microflutes,
   GPK’s share is [0-5]% and ARP’s [10-20]%.
42 Form CO, Table 47 “Spain – overall paperboard converting activities in 2020”. Including microflutes,
   GPK’s share is [10-20]% and ARP’s is [0-5]%.
43 Form CO, Table 31 “Germany – paperboard converting activities by end-use segment in 2020”. Including
   microflutes, GPK’s is [0-5]% and ARP’s [10-20]%.
44 Competitors’ market shares are based on Prism, as they were not available under Pira. Parties´ shares
   under Prism are [0-5]% (GPK) and [20-30]% (ARP).
45 GPK’s presence in this area is so limited that Prism does not even record it as a competitor (it attributes to
   it a [0-5]% share in 2020.
                                                         8
 ---pagebreak---             (vi) In the supply of folding cartonboard packaging market for personal care
                   products in Poland, the situation would be very similar: GPK’s market share
                   would only be [0-5]% and ARP’s market share is [50-60]%, resulting in a
                   combined market share of [50-60]% post-transaction.46 Post-transaction the
                   main remaining competitors would be Mayr-Melnhof, with a [10-20]%
                   market share, Essentra with a [10-20]% market share, and Van Genechten,
                   with a [10-20]% market share. In this case, although ARP’s market share pre-
                   transaction is high, GPK’s presence is minuscule, thus the structure of supply
                   will remain essentially unaffected by the Transaction. Although the Party’s
                   combined share post-merger is relatively high, GPK’s activities appear to be
                   particularly limited in Poland. In 2020, GPK’s sales in folding packaging
                   cartonboard in Poland were […], amounting to less than [0-5]% of the overall
                   market (i.e. including all end-uses). In particular, GPK’s presence in personal
                   care appears to be merely symbolic, with sales of […] in 2020. Moreover, all
                   but one of the competitors active in the personal care segment confirmed that,
                   in case of a price increase by the Parties post-Transaction, they could
                   increase production to supply customers willing to switch. 47
            (vii) In the supply of folding cartonboard packaging market for food products in
                   Spain, GPK’s market share is [30-40]% and ARP’s market share is [0-5]%,
                   resulting in a combined market share of [30-40]%.48 Post-Transaction the
                   main remaining competitors would be Hinojosa Packaging, with a [20-30]%
                   market share, Mayr-Melnhof, with a [10-20]% market share, and Alzamora,
                   with a [10-20]% market share. In other words, the Transaction would entail
                   the merger of the biggest player with one of the smallest. There would be one
                   competitor with a market share of [20-30]%, and there would be at least three
                   competitors with market shares substantially higher than the market share
                   increment brought about by the Transaction.
(25)     Second, the Parties do not appear to be close competitors in any of the plausible
         markets referred to in paragraph (20) since they have a highly complementary
         footprint in the EEA as regards both their product portfolio and the geographies
         where they are active: GPK appears to be well established in beverages and food but
         is considerably weaker in health care and personal care, and the latter two are the
         sectors (besides food) where ARP’s presence in the EEA is more prominent.49
         Geographically, GPK is particularly weak precisely in those countries where ARP’s
         presence seems more significant (Croatia, Czechia, Finland, Germany (except in
         beverages), Greece, Hungary, and Poland). And at EEA level, this complementarity
         is also reflected in the Parties’ very distant position in terms of market shares, as
         illustrated in paragraph (24) above.
(26)     Third, there are alternative sources of supply for customers in all of the plausible
         markets referred to in paragraph (20). Post-Transaction there would generally remain
         at least three relevant competitors in all potentially affected markets considered.
46  Form CO, Table 44 “Poland – paperboard converting activities by end-use segment in 2020”. The shares
    including microflutes would be less than [0-5]% and [40-50]%, respectively.
47 See replies to question 41 in Questionnaire Q2 to Competitors . See also paragraphs (25)-(28).
48 Form CO, Table 48 “Spain – paperboard converting activities by end-use segment in 2020”. Including
    microflutes, GPK’s share is [20-30]% and ARP’s [0-5]%.
49 One of the customers in the beverage sector even admitted it did not know ARP. See Minutes of Call
    between DG COMP and a customer of 8 September 2021.
                                                         9
 ---pagebreak---         Among the names mentioned by customers as alternative suppliers to turn to in case
        of a price increase by the Parties are Westrock, Karl Knauer, Baden Packaging, Van
        Genechten, WB Verpackungen, Colordruck in the beverage segment, Aujaton,
        Westrock, Edelmann or MMP for personal care products, and Seda, Huhtamäki,
        MMK or VG for the packaging of food products. The Commission has also
        investigated whether, besides local players, customers could also resort to
        multinational players capable of supplying facilities across the EEA. In this respect,
        when asked how many alternative suppliers (i.e. other than the Parties) they had with
        the ability to serve (even potentially) several EEA Member States (in terms of
        capacity, technology, and plants across Europe), the most common replies among
        customers in all sectors was ‘three to five’ or ‘more than five’.50 Moreover, these
        alternative suppliers have spare capacity available: all except one of the competitors
        indicated during the market investigation that they could increase production to serve
        customers present all around the EEA.51
(27)    Fourth, switching is relatively frequent in all of the plausible markets referred to in
        paragraph (20), and takes place in competitive conditions. A majority of customers
        indicated that contracts are renewed regularly every 3-4 years, in general through
        tenders or equivalent competitive negotiations, where numerous suppliers
        participate.52 When asked, a majority of customers across all sectors indicated that at
        least five suppliers participate in the tenders or are considered in the negotiations for
        new contracts or renewals.53
(28)    Fifth, and finally, as to the impact of the Transaction, only a minority of customers
        and competitors in any of the plausible markets referred to in paragraph (20) were of
        the view that prices would become more expensive as a result of the Transaction.54
        And at the same time, only a minority of customers (in all market segments)
        indicated that, in case the Parties decided to raise prices post-merger, there would not
        be sufficient alternative suppliers to turn to cover all their needs.55 Although some
        market respondents showed their concern due to the loss of one competitor, overall
        the majority of the responses were neutral or even positive. Two large customers in
        the beverage sector indicated that “GPK would gain additional capacity as a result
        of this transaction which could translate to lower prices due to efficiency gains. […]
        there is still enough competition in the market for this transaction not to impact
        prices long term”56 and that “[w]e expect the prices [to] remain the same, since
        there is enough competition in the market. The merger between [GPK] and [ARP]
        will not add any new capacity to the market”.57
50  See replies to questions 27, 32 and 37 in Questionnaire Q1 to Customers.
51  See replies to questions 39, 41, and 43 in Questionnaire Q2 to Competitors.
52  See replies to questions 25, 26, 30, 31, 35, 36 in Questionnaire Q1 to Customers . Although most
    competitors indicated renewals take place every one-two years (see replies to questions 26, 30, 34 in
    Questionnaire Q2 to Competitors).
53  See replies to questions 26, 31, 36 in Questionnaire Q1 to Customers .
54  See replies to questions 39, 41, and 43 in Questionnaire Q1 to Customers , and replies to questions 38, 40,
    and 42 in Questionnaire Q2 to Competitors.
55  See replies to questions 40, 42, and 44 in Questionnaire Q1 to Customers . This is consistent with
    competitors’ replies that they could increase their production if needed (see paragraph (26)).
56  See reply from a customer to question 39.1 in Questionnaire Q1 to Customers .
57  See reply from a customer to question 39.1 in Questionnaire Q1 to Customers .
                                                           10
 ---pagebreak--- 5.1.3. Conclusion
(29)   In view of (i) the limited market share increment in all plausible affected markets,
       (ii) the apparent complementarity of the Parties’ activities as regards products and
       geographies within the EEA, which suggests they are not particularly close
       competitors, (iii) the existence of alternative suppliers in all market segments to
       which customers could switch and that contracts are renewed frequently through
       tenders or competitive processes; and (iv) the existence of spare capacity for
       suppliers to increase production and serve customers willing to switch, the
       Commission takes the view that the Transaction does not raise serious doubts as to
       its compatibility with the internal market or the functioning of the EEA Agreement
       with regard to any of the following markets: (i) supply of folding cartonboard for
       soft drinks in the EEA; (ii) supply of folding cartonboard for soft drinks in Western
       Europe; (iii) supply of overall folding cartonboard packaging in Croatia; (iv) supply
       of overall folding cartonboard packaging in Spain; (v) supply of folding cartonboard
       for personal care products in Germany; (vi) supply of folding cartonboard for
       personal care products in Poland; and (vii) supply of folding cartonboard packaging
       for food products in Spain.
6.     CONCLUSION
(30)   For the above reasons, the European Commission has decided not to oppose the
       Transaction 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
                                                      Executive Vice-President
                                                 11