CELEX: 31995M0613
Language: en
Date: 1995-07-31 00:00:00
Title: COMMISSION DECISION of 31/07/1995 declaring a concentration to be compatible with the common market (Case No IV/M.613 - Jefferson Smurfit PLC / Munskjo AB) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31995M0613

COMMISSION DECISION of 31/07/1995 declaring a concentration to be compatible with the common market (Case No IV/M.613 - Jefferson Smurfit PLC / Munskjo AB) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 252 , 28/09/1995 P. 0003

  COMMISSION DECISION of 31/07/1995 declaring a concentration  to be compatible with the common market (Case No IV/M.613 -  Jefferson Smurfit PLC / Munskjo AB) 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 :<ind> Case No IV/M.613  JEFFERSON SMURFIT GROUP PLC  / MUNKSJO AB  <ind> <ind> Notification of 28 June 1995 pursuant to Article  4 of Council Regulation No 4064/89  1.<ind> On 28 June 1995 Jefferson Smurfit Group plc  (Jefferson Smurfit) notified to the Commission its intended  acquisition of 29.04% of the shares in Munksjo AB  (Munksjo).  I<ind> THE PARTIES  2.<ind> Jefferson Smurfit, incorporated in Ireland, is an  integrated manufacturer and converter of paper and  paperboard whose main operations are located in Europe, the  United States of America and Latin America. Its European  activities were substantially increased in 1994 by its  acquisition of the paper packaging interests of Compagnie  Saint Gobain [approved by the Commission (IV/M.499   Jefferson Smurfit/St Gobain)].  3.<ind> Munksjo is a Swedish manufacturer of paper and paper  products. Its shares are publicly quoted.  II<ind> THE OPERATION  4.<ind> Jefferson Smurfit at present holds no shares in  Munksjo.  The shares which it intends to acquire are held by  Trelleborg AB, a Swedish mining company.  Trelleborg  formerly held 100% of the shares in Munksjo but after  divestment by public offer in 1993 held 25%;  it  subsequently increased its shareholding to 29.04%.  The  remaining 78.06% of the shares are held by over 12000  shareholders, both individuals and institutions. Over40% of  the shares are held by shareholders who are not Swedish. The  second largest shareholder holds 5.9% and only four others  hold more than 3%. Only one Swedish shareholder holds more  than 2%.  Shareholders holding 35.4% of the shares attended  the annual general meeting in 1994. Of the votes cast at  that meeting Trelleborg held [Deleted business secret: more  than 50%.].  Shareholders holding 32.2% of the shares  attended the annual general meeting in 1995.  Of the votes  cast at that meeting Trelleborg held [Deleted business  secret: more than 50%.]  .  5.<ind> The operation does not include a shareholders  agreement.  Jefferson Smurfit will simply succeed to the  rights which Trelleborg enjoyed as holders of 29.04% of the  shares in Munksjo.  6.<ind> There is nothing to suggest that Jefferson Smurfit  will not enjoy the same possibility of exercising decisive  influence (and therefore control) over Munksjo as Trelleborg  has enjoyed since 1993. The Commission has concluded in  earlier decisions [IV/M.025  ArjomariPrioux SA/Wiggins Teape  Appleton plc;  IV/M.343  Société Générale de  Belgique/Générale de Banque ] that, where a shareholder has  a substantial minority interest in an undertaking and the  remaining shares are widely dispersed, and particularly  where the substantial but minority shareholder de facto  controls the voting at the annual meeting, that shareholder  exercises decisive influence on the undertaking within  article 3(3) of the Regulation.  7.<ind> The operation accordingly constitutes a  concentration within the meaning of article 3(1)b of the  Regulation.  III<ind> CONCENTRATION OF COMMUNITY DIMENSION  8.<ind> The undertakings concerned have a combined aggregate  worldwide turnover in excess of 5000 million ECU (Jefferson  Smurfit group 5,948 million ECU, Munksjo 351 million ECU).  Each of them has a Communitywide turnover in excess of 250  million ECU (Jefferson Smurfit group 2,518 million ECU,  Munksjo 282 million ECU), but they do not achieve more than  twothirds of their aggregate Communitywide turnover within  one and the same Member State.  9.<ind> The operation therefore has a Community dimension  within the meaning of Article 1(2) of the Regulation.  IV<ind> COMPATIBILITY WITH THE COMMON MARKET  <ind> A. RELEVANT PRODUCT MARKETS  10.<ind> Jefferson Smurfit has identified the following  product markets, corresponding to those products in which  there is either overlap with Munksjo or there could be a  vertical relationship:  <ind> <ind> Corrugated Case Materials (overlap)  <ind> <ind> Corrugated Cases (overlap)  <ind> <ind> Market Pulp/Coated Paper (vertical).  <ind> Corrugated Case Materials  11.<ind> Corrugated Case Materials (CCM) are paper products  used in the production of corrugated board. Corrugated board  takes the form of sheets composed of an undulating middle,  called fluting, which has  paper outer layers on both sides,  called linerboard.   12.<ind> The most important distinction within CCM is  between those products made from virgin fibre, known as  kraftliner, and those made from waste based fibre, known as  testliner. However, in its Jefferson Smurfit/St. Gobain  decision of 19.9.94 [Case No IV/M. 499] the Commission  concluded, with regard to the said products, that there was  a high degree of crosssubstitutability both on the supply  and demand sides and that there was a similar pattern in   their respective price trends. Moreover, both in the said  decision and in a later Commission decision, Svenska  Cellulosa/PWA of 20.2.1995 [Case No IV/M.549], it was not  found  necessary to define the market more precisely, as  even with a narrower market definition, there was no problem  of dominance. The same is true in the present case as set  out in the assessment in paragraph 22 below and,  consequently,  the question of product market definition for  CCM can be left open.  <ind> Corrugated Cases  13.<ind> Corrugated cases are packaging materials  constructed out of sheets of corrugated board, which have an  infinite number of configurations determined by the nature  of the goods being transported. Corrugated cases producers  range from those which are integrated to the level of  supplying their own CCM and/or corrugated board, to those  who purchase corrugated sheets from third parties and simply  convert these into corrugated cases. The producers of  corrugated cases are generally differentiated by the degree  of sophistication and specialization of their production and  most integrated companies characterize their operations as  providing packaging solutions for their customers, as  opposed to simply producing standard boxes.   14.<ind> Corrugated cases are in competition with packaging  materials made from wood and plastic, into whose markets  they have made significant inroads, due to recent technical  advances in terms of strength, durability and recyclability.  However, it is not necessary to define the market precisely  as, even on the basis of a narrower market definition, the  Commission's assessment, as set out in paragraph 23 below,  would not be affected. This was also the case in both of the  previous Commission decisions [Cases Nos IV/M. 499 and IV/M.  549] mentioned in paragraph 12 above involving this product  .  <ind> Market Pulp/Coated Paper  15.<ind> Pulp is an intermediate product used between the  raw material  wood  and the ultimate product  paper. When  sold on the open market, as opposed to being used as an  integral part of paper manufacture in a paper mill, this  product  is known as market pulp.  16.<ind> Coated papers are superior grades of printing and  writing paper, also known as graphic papers, which are  coated on one or two sides to give a glossy surface, and are  produced from pulp. They are used mainly in advertising and  magazine publishing.  17.<ind> In both of the decisions referred to in paragraphs  12 and 14 above, as also in its earlier  Torras/Sarrio  decision of 24.2.1992 [Case No IV/M.166], the Commission  identified four submarkets within the graphic or fine papers  market (which is itself distinct from the markets for  selfadhesive paper and selfcopying paper), two of which make  up coated paper, i.e., woodfree and woodcontaining coated  paper, the other two being uncoated woodfree and uncoated  woodcontaining paper. A more precise market definition is  unnecessary, due to the lack of any competition concern with  regard to the vertical relationship between market pulp and  coated paper in this case, even under the narrowest  definition as set out in paragraph 24 below.  <ind> B. RELEVANT GEOGRAPHIC MARKETS  <ind> Corrugated Cases Materials  18.<ind> Corrugated Case Materials (CCM), whether made from  virgin fibre or from waste based fibre, are characterized by  high density and consequent easy transportability. Most  virgin based CCM consumed in the EU is supplied by the  Scandinavian countries, while there are also substantial  imports from outside the EEA, including from the U.S.,  Canada, Brazil and South Africa, due to the limited amount  of suitable timber resources within the EU. At the same  time, one third of the waste based CCM consumed in the EU is  traded across national borders. Jefferson Smurfit contends  that the fact that a smaller proportion of this waste based  fibre is imported from outside the EU than is the case in  virgin based fibre is due to the prevalence in the EU of  collection and recycling of paper grades. A change in this  level of import of waste based fibre to the EU in response  to change in the competitive situation cannot be excluded.  Consequently, as in the case of two previous Commission  decision [Cases Nos IV/M. 499 and IV/M. 549] involving this  product, the geographic market can be considered to be at  least EEAwide.  <ind>   <ind> Corrugated Cases  19.<ind> Corrugated cases are characterized by low density  and consequently relatively high transport costs. According  to Jefferson Smurfit, these characteristics result in  largely regional markets, determined by a distance radius of  from 200 to 300 kilometres between the corrugator and its  customers, regardless of the presence of national borders.  However, Jefferson Smurfit has pointed out that, due to the  demands of major customers who want their packaging problems  to be solved by a single provider, such regional markets do  not operate in isolation and increasingly  competition is  among multinational packaging groups serving global  customers. The Commission, however, in this case, as in two  previous decisions [Cases Nos IV/M. 499 and IV/M. 549]  involving this product, can leave the question of geographic  market open, as even the narrowest definition would not  alter its assessment as set out in paragraph 23 below.  <ind> Market Pulp/Coated Paper  20.<ind> With regard to market pulp, Jefferson Smurfit  considers that this product's high density and consequent  easy transportability make its market worldwide. The  Commission, however, in an earlier decision [Case No M/IV.  166] involving this product, in view of the evidence of  related trade flows, considered it to be at least EEAwide.  Moreover, as even on the basis of the latter narrower  definition there is no competition concern with respect to  this product, it is not necessary to consider a broader  market definition in this case.  21.<ind> With regard to coated paper, Jefferson Smurfit  contends that, as in the case of market pulp, due to the  high density and easy transportability of the product,  characteristic moreover of printing and writing papers in  general (graphic paper), its market is worldwide.  Nonetheless, as, due to the superior quality of European  paper, (e.g. compared to the US), imports have not played a  significant role in the market for coated paper, the  Commission in its previous decisions in the Jefferson  Smurfit/ St. Gobain andSvenska Cellulosa/PWA cases [Cases  Nos IV/M. 499 and IV/M. 549], which involved coated and  uncoated paper respectively, defined the market as EEAwide.  Such a definition is likewise valid for the present case.  V<ind> ASSESSMENT  <ind> Corrugated Case Materials (CCM)  22.<ind> According to Jefferson Smurfit and data available  to the Commission, the combined 1994 market share of  Jefferson Smurfit and Munksjo in CCM in the EU does not  exceed 15%. On the basis of 1993 figures and the 1994 data  available, Jefferson Smurfit estimates the combined 1994 EEA  market share at below 15%, thus falling short of the share  required to be considered an affected market.  <ind> Corrugated Cases   23.<ind> Based on the data available for 1993 and 1994,  Jefferson Smurfit estimates the combined market share of  Jefferson Smurfit and Munksjo in corrugated cases in the EEA  at below 15%. At member state and regional level, there is  no addition of market share as a result of the proposed  operation as Munksjo is only present in Sweden in this  product, while Jefferson Smurfit is not present in any of  the Scandinavian countries. Consequently, corrugated cases  are not considered to be an affected market in this case.  <ind> Market Pulp/Coated Paper  24.<ind> Pulp is an upstream product for the production of  coated paper. Jefferson Smurfit is not active in the open  market for pulp and Munksjo is not a producer of coated  paper. According to Jefferson Smurfit and data available to  the Commission, Munksjo's production of pulp represented  less than 25% of the EU market for this product in 1994,  while Jefferson Smurfit's production of coated paper  represented less than 25% of the EU market for that down  stream product. Consequently, in the case of the proposed  operation, the coated paper market is not considered to be  an affected market in a vertical sense.  VI<ind> CONCLUSION  25.<ind> As set out above, none of the  product markets,  which were identified by Jefferson Smurfit as those in which  there was either an overlap (CCM and corrugated cases) or  the possibility of a vertical relationship (market  pulp/coated paper) with Munksjo, constitutes an affected  market for the purposes of this assessment. Consequently, it  is considered that there is neither creation nor  strengthening of a dominant position as a result of the  proposed operation.  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,