CELEX: 31994M0522
Language: en
Date: 1994-11-28 00:00:00
Title: COMMISSION DECISION of 28/11/1994 declaring a concentration to be compatible with the common market (Case No IV/M.522 - Scandinavian Project) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31994M0522

COMMISSION DECISION of 28/11/1994 declaring a concentration to be compatible with the common market (Case No IV/M.522 - Scandinavian Project) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 343 , 06/12/1994 P. 0013

 COMMISSION DECISION of 28/11/1994 declaring a concentration to be compatible with the  common market (Case No IV/M.522 - Scandinavian Project) 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. MERGER PROCEDURE ARICLE 6(1)b DECISION PUBLIC VERSION To the notifying parties  Dear Sirs, Subject:<ind> Case N* IV/M.522 - Scandinavian Project <ind> <ind> <ind> Notification of 29.9.1994 pursuant to Article 4 of Council Regulation N*  4064/89 1.<ind> On October 26, 1994, Kooperativa Foerbundet (KF), Svenska Lantmaennen Riksfoerbund  (SLR), Atle Foervaltnings AB (Atle), Bure Foervaltnings AB (Bure), Allmaenna Pensionsfonden 4:e  fondstyrelsen (AP4), Svenska Handelsbanken (SHB) and Skandia (Skandia) jointly notified four  transactions, in each of which the notifying parties will acquire joint control of a company which  previously was wholly controlled by KF. SLR is a contracting party to one transaction only while the  rest of the parties mentioned are parties to all transactions.  In all transactions, Atle, Bure, AP4,  SHB and Skandia collaborate as a group of investors and exercise collectively their controlling  interest in the companies involved. The transactions notified concern the acquisition of joint control  respectively of Karlshamns AB, BT Industries AB, Gislaved Folie AB and Elmo-Calf AB. 2.<ind> After examination of the notification, the Commission has concluded that the notified  transactions constitute concentrations falling within the scope of Council Regulation N  4064/89.  These concentrations do not raise serious doubts as to their compatibility with the common market  and with the functioning of the EEA Agreement. I.<ind> THE PARTIES <ind> Acquiring Companies 3.<ind> KF is the central organization of Swedish consumer cooperatives. According to KF:s 1993  Annual Report, KF has more than  100 cooperative member societies.  KF is primarily active in  retail trade of foodstuffs and other convenience goods. The companies whose shares are partially  disposed of by KF in the operations concerned belong to Nordico AB, a group of industrial  companies wholly owned by KF, that mostly deal with external customers. 4.<ind> SLR is a holding organization owned by 13 Swedish regional farmers' cooperatives; it has  five business areas: agriculture, mill and bakery operations, marketing of machinery, sale of energy  (biofuels) and production of feedstuffs. 5.<ind> Atle is a Swedish investment company whose business strategy is to invest indirectly -  through other venture capital organizations - in small and medium-sized Swedish companies. Atle  has a number of such indirect investments. 6.<ind> Bure is a Swedish investment company which currently has interests in the engineering  industry and in the production of certain foodstuffs (confectionery). 7.<ind> AP4 is the fourth board of the Swedish General Pension Fund which  is a public   organization whose activity consists of investing pension funds for various profitable purposes.  According to the Swedish law, the General Pension Fund is organized into five independent entities  (Boards) each of which has its own independent board of directors. It is stated in the preparatory  documents of the  Swedish legislation in question that the boards must operate independently. Only  the fourth board and the fifth board are allowed to invest in shares of companies and comparable  securities. The notifying parties have confirmed to the Commission that there is no coordination of  activities between the fourth and fifth pension fund board. 8.<ind> Svenska Handelsbanken is a Swedish group of companies which carries on all kinds of  banking services. The particular company belonging to the group that is a party to the operations  concerned is Svenska Handelsbanken Livfoersaekringsbolag,   9.<ind> Skandia is a Swedish group of companies which carries on life assurance, non-life insurance  and reinsurance. The particular company belonging to the group that is a party to the operations  concerned is Livfoersaekringsbolaget Skandia. <ind> Acquired Companies 10.<ind> Karlshamns AB is a Swedish company whose primary business is the production of  vegetable oils for the food processing, the cosmetics and pharmaceutical industries, and for final  consumption. 11.<ind> BT Industries AB is a Swedish company whose primary business is the manufacture of  electric and manual lift trucks which are used in material handling within companies.  12.<ind> Gislaved Folie AB is a Swedish company whose primary activity is the manufacture of  plastic materials which are used by the automotive industry as coverings of cars' interior and by the  furniture industry.  13.<ind> Elmo-Calf AB  is a Swedish company which produces high-quality leather that is used by  car and furniture industries. II.<ind> THE OPERATIONS 14.<ind> As far as Karlshamns AB is concerned, shares and voting rights are divided between the  notifying parties in the following manner: KF 42%, SLR 33%, Atle 8.6%, Bure7.6%, Skandia 4.9%,  AP4 2.9%, SHB 1.0%. The ownership of Karlshamns AB is arranged by the notifying parties  through Kelar Holding AB which is used to acquire all the shares in Karlshamns AB from KF's  industrial group Nordico AB. The division of shares and voting rights stated above are related to the  joint ownership of Kelar Holding AB. The control of the activities of Karlshamns AB is carried out  through Kelar Holding AB.  15.<ind> As far as BT Industries AB, Gislaved Folie AB and Elmo-Calf AB are concerned, voting  rights are divided in the following manner: KF 47.0%, Atle 20.7%, Bure 18.4%, AP4 7.0%, Skandia  4.6% and SHB 2.3%. The notifying parties use AB Grundstenen to acquire all the shares in these  companies.  The division of voting rights stated above are related to the joint ownership of AB  Grundstenen. The control of the activities of these companies is carried out through AB  Grundstenen. III.<ind> THE CONCENTRATIONS 16.<ind> The notifying parties have concluded four transactions involving a passage from sole to  joint control; all of the resulting joint ventures have a concentrative character within the meaning of  the Merger Regulation.  <ind> Joint control 17.<ind> In the case of Karlshamns AB, it is stipulated in the shareholders' agreement that Kelar  Holding AB's Board shall comprise no more than six members, out of whom Nordico and SLR shall  each be entitled to appoint two members while the investors jointly are entitled to appoint two  members. The agreement provides that such major decisions as [...](Business secrets deleted.   Certain major decisions that usually confer joint control upon the parties within the meaning of the  Merger Regulation), must be adopted by the unanimous consent of all board members.  In addition,  Atle, Bure, AP4, Livfoersaekringsbolaget Skandia (the life assurance company of the Skandia Group)  and Handelsbanken Liv Foersaekringsbolag (the life assurance company within the SHB Group) have  concluded an investors' agreement by which they have established  a jointly owned and controlled  Swedish company Nordic Capital Svenska AB (Newco). According to the agreement, [...](Business  secrets deleted.  Through Newco, the investors shall unanimously decide upon the appointment of  the two joint members of the Board.) Taking into consideration the right of KF and SLR to appoint  Board members and the decision-making rules of this Board, the Commission concludes that  Karlshamns AB is under the joint control of all the relevant notifying parties, KF, SLR, Atle, Bure,  AP4, Skandia and SHB. 18.<ind> In the case of BT Industries AB, Gislaved Folie AB and Elmo-Calf AB, the relevant  shareholders' agreements  each provide that the Board of AB Grundstenen shall comprise no more  than five members. Out of these members, the investors are jointly entitled to appoint three members  and KF through Nordico AB two members. Major decisions concerning [...](Business secrets  deleted.  Certain major decisions that usually confer joint control upon the parties within the  meaning of the Merger Regulation) must be adopted by the unanimous consent of all board  members. In addition, the establishment through an investors' agreement of Newco and the relevant  provisions of that agreement stated above concern the collaboration of Atle, Bure, AP4, Skandia and  SHB in the control of BT Industries AB, Gislaved Folie AB and Elmo-Calf AB as well.  The  Commission concludes  that BT Industries, Gislaved Folie AB and Elmo-Calf AB are all jointly  controlled by all of the notifying parties. <ind> Full Function Entities 19.<ind> Karlshamns AB, BT Industries AB, Gislaved Folie AB and Elmo-Calf AB are all going  concerns that do business primarily with customers and suppliers independent of the notifying  parties. The Commission concludes that the companies stated above are full-function joint ventures.   <ind> Absence of Coordination 20.<ind> The parents of the joint ventures are not active on the markets on which the joint ventures  operate. Neither are the joint ventures themselves operating on the same markets. There is therefore  no potential for coordination arising from the transactions notified. IV.<ind> COMMUNITY/EEA DIMENSION 21.<ind> The notifying parties have concluded four transactions involving passing from sole to joint  control; all of the resulting joint ventures have a concentrative character within the meaning of the  Merger Regulation. Article 5(2), second subparagraph, of the Merger Regulation provides that two  or more transactions that take place within a two-year period between the same persons or  undertakings shall be treated as one and the same concentration arising on the date of the last  transaction. Of the four transactions stated above, the one concerning Karlshamns AB was  concluded between KF, SLR, Atle, Bure, AP4, SHB and Skandia. The rest of the transactions, those  concerning BT Industries AB, Gislaved Folie AB and Elmo-Calf AB, were concluded on the same  date between KF, Atle, Bure, AP4, SHB and Skandia, i.e. between the same parties, resulting in  exactly the same division of voting rights in the target companies between the parties.  Therefore,  the Commission concludes that the four transactions concerned constitute only two concentrations  within the meaning of the Merger Regulation, that concerning Karlshamns AB on the one hand and  that concerning BT Industries AB, Gislaved Folie AB and Elmo-Calf AB on the other. 22. Both concentrations  have a Community dimension as specified in Article 1(2) of the <tab>  Merger Regulation: In both cases the combined aggregate worldwide turnover of all <tab>  undertakings concerned is more than ECU 5000 million. In both cases, the aggregate <tab>  Community-wide turnover of each of at least two of the undertakings concerned is <tab> more than  ECU 250 million. In neither case do each of the undertakings concerned <tab> achieve more than  two-thirds of its aggregate Community-wide turnover within one <tab> and the same Member  State. 23.<ind> Both concentrations proposed constitute co-operation cases under the EEA Agreement  since the combined turnover of the undertakings concerned in the territory of the EFTA States is in  both cases in excess of 25% of their total turnover within the EEA. V.<ind> COMPATIBILITY  WITH THE COMMON MARKET AND THE EEA AGREEMENT A.<tab> Transaction concerning Karlshamns AB Relevant markets 24.<ind> The notifying parties delineate three major activity areas on which Karlshamns AB is  active: <ind> -<ind> the production of vegetable oils to be used by the food-processing, pharmaceutical and  cosmetics industries and vegetable oils destined for final consumption <tab> -<ind> the production of fatty acids and glycerol <tab> -<ind> the production of rape-based lubricants for industrial purposes 25.<ind> Karlshamns AB is active, first and foremost, on Swedish markets but it does operate in  various EC member countries as well and does have some particularly high market shares in some  EFTA-countries and in the EFTA-area as a whole. 26.<ind> The industries stated above use vegetable oils to achieve a desired consistency, energy  value, texture, flavour or nutritional value for their own products. Similar vegetable oils are used by  households as well. The raw material used by Karlshamns AB to produce the vegetable oil is mostly  rape. Swedish farmers owning SLR produce the rape seeds out of which the oil is obtained by  crushing. Farmers sell the seeds to a State organization which pays a guaranteed price for them.  Karlshamns AB obtains its rape raw materials partly as crude rape  oil and partly as rape seeds. It  purchases the crude rape oil from Svenska Oljeextration AB, a 50/50 joint venture between  Karlshamns AB and Unilever Sverige AB. Karlshamns AB buys the rape seeds from the state  organization. Thus, while the farmers owning SLR produce the rape raw material, no direct vertical  link between SLR and Karlshamns AB arises. Karlshamns AB has a very high market share on the  Swedish markets, [...](Business secrets deleted.  More than 50%.) but in other Nordic countries its  market share is in the range of [...](Business secrets deleted.  Less than 10%.) and even less in the  EC member countries.  Both industry and final consumers have substitutes at their disposal,  particularly those based on animal feed. It is not, however, necessary to delineate relevant product  and geographical markets to which the vegetable oil business of Karlshamns AB belongs to as there  is no horizontal overlap nor vertical link between the parents and Karlshamns AB. As Karlshamns  AB's market shares do not increase, the transaction does not by itself  strengthen Karlshamn AB's  strong market position on the Swedish market for these vegetable oils. 27.<ind> Fatty acids and glycerol are produced from tallow, palm oil, rape seed oil, soya bean oil or  crude soap lye glycerine. The raw materials are byproducts of food products or soap. Fatty acids and  glycerol are used mainly as raw materials for various branches of the chemical industry. Various  petroleum-based derivatives may in many cases be substituted for fatty acids and glycerol in these  industries. Karlshamns AB has a particularly high market share in Sweden [...](Business secrets  deleted.  Between 40 and 70%.) and in Finland [...](Business secrets deleted.  Between 40 and 70%.)  and in EFTA-markets as a whole [...](Business secrets deleted.  Between 30 and 45%.) but its share  on the markets of EC member countries is significantly smaller [...](Business secrets deleted.  Less  than 15%.) The delineation of relevant product and geographical markets may be left open for  reasons already stated. 28.<ind> Lubricants made of vegetable raw materials may be used in industry as hydraulic oil, chain  saw oil and cutting fluids or oils in metalworking applications; These products face substitute  competition from more traditional, mostly petroleum-based or synthetic products. The share of  vegetable-based lubricants is a minimal part of the total use of lubricants. For this reason and the  reasons stated above it is not necessary to delineate the extent of the relevant product and  geographical markets to which vegetable-based lubricants by Karlshamns AB belong to. B.<ind> Transaction concerning BT Industries AB 29.<ind> BT Industries AB is active in the development, production, and marketing of battery- powered electric support arm trucks that are used in the internal materials handling of various  industrial and trading concerns.  If this type of truck is regarded as a separate relevant product  market, BT Industries AB ranks as the third-largest producer within the EEA markets with a market  share of [...](Business secrets deleted.  Between 10 and 20%.), after Jungheinrich group  [...](Business secrets deleted.  Between 30 and 40%.) and Linde group [...](Business secrets deleted.   Between 30 and 40%.) On the Nordic markets BT Industries AB has the largest market share  (Sweden [...](Business secrets deleted.  Between 25 and 60%.), Norway [...](Business secrets deleted.   Between 25 and 60%.), Finland [...](Business secrets deleted.  Between 25 and 60%.), Denmark  [...](Business secrets deleted.  Between 25 and 60%.).  Electric support arm trucks are likely to face  competition from other kinds of trucks, notably counterbalanced trucks. The delineation of relevant  product and geographical  markets may be left open, as there is no horizontal overlap nor vertical  link between BT Industries AB and its parents and therefore no increase of market shares in any  potentially relevant market. The transaction concerning BT Industries AB  therefore does not by  itself create or strengthen a dominant market position.  C.<ind> Transaction concerning Gislaved Folie AB 30.<ind> Gislaved Folie AB is active in the production and marketing of PVC and ABS/PVC films  and foils, and quite recently ASA and PP films and foils. Gislaved Folie AB's products are used in  the car industry in dash boards, sun visors and door linings of cars. Gislaved's products are used by  industrial customers to laminate steel, chipboards, plywood or gypsum board as well (the decor  market). Gislaved Folie AB also produces PVC-tape which is used by carpet factories to weave  plastic carpets (the weaving market). Gislaved Folie AB is active mostly on the Nordic markets. It  has high market shares in the automotive sector ([...](Business secrets deleted.  Between 40 and  50%.) in EFTA, [...](Business secrets deleted.  More than 50%.) in Sweden), in the decor market   ([...](Business secrets deleted.  Between 45 and 55%.) in EFTA, [...](Business secrets deleted.  More  than 60%.) (in Sweden) and in the weaving market [...](Business secrets deleted.  More than 85%.)  in EFTA). Its market shares in the EC member countries are minimal (with the exception of the  decor market/ [...](Business secrets deleted.  Less than 10%.) is not necessary to delineate the  relevant product and geographical markets to which Gislaved Folie AB's various products belong to  as there is no horizontal overlap nor vertical links between Gislaved Folie AB and its parents and  therefore no increase of market shares. The transaction concerning Gislaved Folie AB does not by  itself create or strengthen a dominant market position. D.<ind> Transaction concerning Elmo-Calf AB 31.<ind> Elmo-Calf AB's produces mainly high-quality leather which is used in the furniture  industry and car industry. Elmo-Calf AB also produces split which is a byproduct of high-quality  leather production but the latter is of lesser economic importance. Elmo-Calf AB is active both in the  EFTA countries and in the EC member countries. The notifying parties regard as the relevant  product market that for high-quality covering for the furniture and car industries.  To the extent that  leather and PVC-materials produced by Gislaved Folie AB could be used by the car industry, there  might be some possibility for coordination between Elmo-Calf AB and Gislaved Folie AB. In the  present case, however, the potential scope for coordination is insignificant since Elmo-Calf AB and  Gislaved Folie AB basically produce different car components. Elmo-Calf AB produces leather, first  and foremost, to be used in car seats  while Gislaved Folie AB's materials are mostly used in other   car components (see above). <ind> Defined in this manner, competition from other materials would constrain the share of leather  products. It is not necessary, however, to further delineate relevant product and geographical  markets as there is no horizontal overlap nor vertical links between  Elmo-Calf AB and its parents  and therefore no increase in market share. VI.<ind> CONCLUSION 32.<ind> The absence of horizontal overlaps and vertical links between the parents and the joint  ventures implies that the four transactions notified do not by themselves create or strengthen a  dominant market position as a result of which effective competition would be significantly impeded  in the EEA market. Therefore the Commission has decided to declare the four transactions, which  constitute two concentrations within the meaning of the Merger Regulation(see paragraph 21) ,  compatible with the common market and the functioning of the EEA Agreement. This decision is  adopted in application of Article 6(1)(b) of Council Regulation N  4064/89 and Article 57 of the  EEA Agreement. For the Commission