Article 1 
Subject to full compliance with the conditions and obligations, as set out in Annex II, the notified operation whereby Hutchison Ports Netherlands BV and Rotterdam Container Participatie Maatschappij BV acquire joint control of Europe Combined Terminals BV is hereby declared compatible with the common market and the functioning of the EEA Agreement. Article 2 This decision is addressed to: Rotterdam Container Participatie Maatschappij BV Galvanistraat 15 PO box 6622 3002 AP Rotterdam The Netherlands Hutchison Ports Netherlands BV Nolst Trenité Plaza Weena 666 PO box 190 3000 AD Rotterdam The Netherlands Done at Brussels, 3 July 2001. For the Commission Mario Monti Member of the Commission (1) OJ L 395, 30.12.1989, p. 1; corrigendum in OJ L 257, 21.9.1990, p. 13. (2) OJ L 180, 9.7.1997, p. 1. (3) OJ C 210, 5.9.2003. (4) OJ 13, 21.2.1962, p. 204/62. (5) OJ L 1, 4.1.2003, p. 4. (6) In the following "RMPM" and "RCPM" are used interchangeably, as RCPM is controlled by RMPM and has no business activity of its own. (7) OJ C 66, 2.3.1998, p. 5. (8) For example, to secure the completion of the Delta 2000 to 2008 development, something in which both Hutchison and RMPM had a clear interest. (9) Provided in the context of Cases COMP/37.688/D2 and COMP/JV.52, which information the parties have agreed may also be used for the purposes of the present case. (10) Save those affecting basic shareholder rights, where a 75 % majority is required. (11) ABN is entitled to two seats, but has filled only one. (12) ABN increased its stake from 14 % to 28 % (a level of shareholding that would allow it, theoretically, to form a voting majority with either of the two strategic investors) at the very last minute, following the abrupt withdrawal of the financial institution ING. (13) Available capacity is becoming saturated. (14) An opinion shared by other knowledgeable observers: Baron Delwaide, president of the Antwerp Port Authority, is thus quoted as saying: "There will be some shipowners who will choose Rotterdam because of Hutchison" (Lloyd's List of 18 May 2001, Annex 8 to the parties' statement of defence of 30 May 2001). (15) In view of these lines' commitment to the European Rail Shuttle, the need to coordinate service patterns and schedules with alliance partners, and shipper preferences, it may be doubted whether it would be commercially viable for Maersk and P & O to transfer the bulk of their operations away from Rotterdam. (16) [Quote from minutes of a meeting of ECT's Supervisory Board]* (17) [Quotes from submissions to and correspondance with the Commission]* (18) Figures for the financial year 1999. Turnover calculated in accordance with Article 5(1) of the merger Regulation and the Commission notice on the calculation of turnover. To the extent that figures include turnover for the period before 1 January 1999, they are calculated on the basis of average ECU exchange rates and translated into EUR on a one-for-one basis. (19) Parts of this text have been edited to ensure that confidential information is not disclosed; those parts are enclosed in square brackets and marked with an asterisk. (20) Form CO, page 25, "Relevant market". (21) Two hundred and twenty-three pages, published by OSC in the United Kingdom in 2000. (22) See, inter alia, pages 12 and 13 and section 6 of North European containerisation. The report identifies four regional markets: north continent west (Rouen to Amsterdam), north continent east (Hamburg/Bremerhaven), United Kingdom/Ireland and Scandinavia/Baltic. (23) For the reasons given at paragraph 25, the Commission distinguishes between services provided to deep-sea container vessels and those provided to short-sea vessels and non-unitised (container-carrying) vessels. The activity (on which an overlap occurs) exercised by the parties to the concentration consists in the provision of stevedoring services to deep-sea container vessels. (24) North European containerisation, page 13. (25) The parties state that the charge per transhipment move is on average [considerably]* lower than that for a hinterland move. (26) Form CO, page 53. (27) See, inter alia, the parties' response to the Commission's questionnaire of 20 March 2001. (28) North European containerisation, pages 176 and 177. (29) Despite the Commission's efforts to provide unambiguous definitions of these traffic flows in its questionnaires to the notifying parties and third parties. (30) Statement of defence of 30 May 2001 ("statement of defence"), paragraphs 32, 33, 34 and 37. (31) North European containerisation, pages 12 and 13. Drewry Shipping Consultants Ltd (DSC), in its report European container port market data (December 2000), uses a slightly different breakdown: United Kingdom, Benelux, Germany/Scandinavia, France. (32) Felixstowe, Southampton and Thamesport are relevant for this case. (33) The other main ports present on this market are: Wallhamn, Oslo, Bergen, Helsinki, Kotka, Hamina, Rauma, St Petersburg, Tallinn, Riga, Ventspils, Klaipeda, Gydnia, Szczecin and Gdansk (see North European containerisation, pages 146 to 149). (34) A view shared by OSC - see North European containerisation, page 23. (35) Page 1867 of the file. (36) Page 2884 of the file. (37) Page 3741 of the file. (38) Pages 2803 and 2804 of the file. (39) Page 2315 of the file. (40) Page 2316 of the file. (41) See, inter alia, OSC Briefing paper, page 9 ("Review of market share"). (42) A view confirmed by market studies (for example, Briefing Paper and North European containerisation), by the notifying parties and by third parties (customers and competitors). (43) Felixstowe, Thamesport, Southampton, Le Havre, Zeebrugge, Antwerp, Rotterdam, Bremerhaven, Hamburg, Gothenburg. (44) The Maersk Sealand terminal had an estimated capacity in 1999 of 2100000 TEU (20-foot equivalent units - the most common container size). The other Algeciras terminal, Isla Verde, had an estimated capacity of 200000 TEU (Source: Drewry, European container port market data, December 2000, page 24). (45) Source: A. P. Møller (reply to Commission's request for information). (46) The Algeciras facility is one of the main European hubs of Maersk Sealand and forms an essential link in that line's shipping operations. There is no evidence that Maersk Sealand would contemplate interrupting and inconveniencing its own shipping operations in order to create additional capacity to accommodate third party volumes. (47) See, inter alia, North European containerisation, page 23. (48) North European containerisation, page 176. (49) OSC Briefing paper, page 13. (50) [Throughput estimates by OSC]*. (51) [Calculation of the increase]*. (52) A post-merger HHI above 1800 is regarded as evidence of a highly concentrated market (see American Department of Justice merger guidelines - 1992 version). (53) [Calculation of the HHI]*. (54) Figures for 1999 adjusted for information provided by terminal operator/port authority. (55) Briefing paper, page 11. (56) In this context it should be noted that the same five ports have a share of "only" 75 % of north European hinterland traffic. The level of concentration with regard to transhipment is thus much higher than the level of concentration with regard to hinterland. It should further be noted that four ports (Rotterdam, Hamburg, Felixstowe and Antwerp) accounted for approximately 81,5 % of transhipment traffic, but "only" 67 % of hinterland traffic [Source: OSC "Briefing paper", table 10]. (57) Source: Maersk Delta business plan. (58) Overall growth or contraction of demand, new entrants (and exits) on the upstream (terminal services) and downstream (liner shipping) markets, restructuring of shipping alliances and services, switches between terminals, increase or decrease of productivity at individual terminals, etc. (59) North European containerisation, page 185. (60) The source quoted is "Ocean Shipping Consultants" January 2001. That report (referred to in this document as the "Briefing paper") does not contain the figures in question. In the table, ECT is shown as having handled [less than 4000000]* TEU in 2000 - this figure differs from that provided by Hutchison Whampoa in its Annual Report 2000 (page 20), where ECT is said to have handled [4200000 to 4500000]* TEU in 2000, i.e. an increase of some [250000 to 350000]* TEU over 1999 throughput. (61) It should first be noted that the table in paragraph 102 of the statement of defence is mathematically flawed (different market totals in columns 1 and 2). The actual transfer of [less than 75000]* TEU is already taken into account in the year 2000 actual throughput figure for ECT - there is thus no need for any further correction to that figure. (62) The parties' "figures" have been obtained by increasing the 1999 actual throughput of the respective ports by 6 % (estimated annual increase of demand in northern Europe). There is no independent confirmation (for example, port statistics, market studies, information from port or terminal operators) of these "figures". (63) That is to say, an increase in transhipment throughput of [around 25000]* TEU over 1999 figures, despite the switch of [250000 to 350000]* TEU to Bremerhaven in 2000. (65) North European containerisation, page 207. (66) European container port market data, page 6. (67) For competitors' shares see table 3. (68) It is precluded from doing so by agreement between the joint venture partners. (69) Although the parties have argued that ECT does not have joint control, the joint venture agreement unequivocally requires unanimous approval of any changes to the jointly agreed pricing policy set out in the agreement. This pricing policy applies to the provision of services to the Maersk Sealand shipping line, i.e. the only services that will be provided by Maersk Delta BV until 2007. ECT's control through this veto right is reinforced by a non-compete clause which explicitly prohibits Maersk Delta from competing with ECT for third-party business. Joint control is also assured by veto rights over major investments and acquisitions - these veto rights go beyond that which is required to safeguard basic shareholder rights (which are in any event protected by a specific provision in the joint venture agreement). (70) It is common practice within corporate groups to invoice internal services at cost price with no, or only an insignificant, mark-up. (71) The Commission has taken the year 2005 as the cut-off date for taking account of developments in the market. Developments beyond that date are generally too uncertain to be relied on in the present assessment. (72) Carel van den Driest (ECT CEO), quoted in P & O Nedlloyd press release of 14 November 2000: "In addition Euromax will ensure room for growth for current and new customers at the [ECT] Delta Terminal for many years to come." (73) The Maersk Delta terminal will require a five-year phasing-in period; it is reasonable to assume a similar phasing-in period for Euromax. (74) The main container terminal in Southhampton is jointly owned by P & O Ports. Southampton is also one of the main hubs of the P & O Nedlloyd shipping line. A significant proportion of the throughput of Southampton is therefore likely to constitute captive production (provision of services by P & O Ports to P & O Nedlloyd). The same applies for Aarhus, which is controlled by A. P. Møller (Maersk) and is one of the main European hubs of the Maersk Sealand shipping line. (75) See recital 103. (76) Briefing paper, table 14: Hessenatie is forecast to have a [10 % to 15 %]* share of capacity in 2005 (NB: this figure includes captive capacity relating to the Hessenatie/MSC joint venture - the figure is thus overstated). (77) North European containerisation, page 55: "...demand growth has been disappointing". (78) The business plan for the Maersk Delta joint venture envisages a five-year phasing in period. (79) With regard to developments at Vlissingen, the Commission notes the following information in the 1999 annual report of RMPM (page 13): "Plans are being made in Flushing (Vlissingen) for the construction of the Westerschelde Container Terminal. The intended operator is the Belgian company Hessenatie. If the plans go ahead, construction and operation of the infrastructure will probably be executed on the instruction of Exploitatiemaatschappij Schelde Maas (ESM). Zealand Seaports and the RMPM each have a 50 percent stake in ESM" (emphasis added). (80) See MSC reply, page 2326 of the file. (81) North European containerisation, page 209. (82) It may be useful to contrast these more recent estimates with an earlier report ("The competitive position of Felixstowe versus Rotterdam terminals", September 1998) in which OSC predicted that a typical Far East vessel in 2010 would have a 6500 TEU capacity, while the largest vessel would be of 8000 TEU size. (83) DynaLiners 13/2001, 30 March, page 5. (84) Containerisation International, March 2001, page 27. (86) North European containerisation, page 210. (87) See, inter alia, Lloyd's List of 3 April 2001, page 18. (88) For example North European containerisation, page 213, Trinity III Extension Development, pages 21 et seq. (a report prepared by OSC for Hutchison). (89) Significant concentration has already taken place in respect of the Far East trades (on which the largest vessels are deployed): in 1995 Felixstowe, Rotterdam and Hamburg accounted for 34 % of all calls in northern Europe by Europe-Asia liner shipping services; by 1999 this proportion had increased to 61 %. (90) According to press reports (Lloyd's List, 17 May 2001, page 5) Lloyd's Register and OSC both take the view that ultra large container ships (ULCS) of 12500 TEU capacity may well be deployed by the middle of this decade. This deployment would be driven by the significant cost savings that the ULCS are expected to provide (up to 19 % over an 8000 TEU vessel). It should be noted that these cost savings are predicated on a reduction in the number of port calls (as compared, presumably, with the number of port calls currently made by the average 8000 TEU vessel). (91) See, inter alia, North European containerisation, pages 206 and 207. (92) North European containerisation, page 222. (93) North European containerisation, pages 206 to 208. See also page 183, where OSC comments, regarding vital requirements for transhipment hubs: "The entire economics of transhipment are based upon scale economies for deep-sea vessels. It is thus vital that these largest vessels can be berthed on any tide with minimum disruption. Problems in this regard have handicapped both Antwerp and Hamburg in recent years. These requirements can only increase as very large vessels further consolidate market share and the economics of ultra large container ships come to the fore". (94) Official rating; the parties contend that the actual capacity is considerably greater. (95) The other North European ports called at by AE1 are Felixstowe and Bremerhaven. (96) North European containerisation, pages 59 and 60. (97) Joint investment in the European Rail Shuttle. (98) Statement of defence, paragraph 36. (99) The economics of the largest vessels are predicated on spending as much time at sea as possible - it follows that only those ports that are able to generate sufficient hinterland volumes will be contenders for calls by these vessels and hence actual and potential competitors on the transhipment market. (100) See for exampe, North European containerisation, at page 213. (101) Commission Decision in Case COMP/M.1891 - BP Amoco/Castrol (OJ C 301, 21.10.2000, p. 23). (102) See recitals 120 and 123 to 126. (103) See to this effect Commission decision in Case M.1651 - Maersk/Sea-Land (OJ C 313, 30.10.1999, p. 6). (104) Thus for example, Eurogate: "With our shipping line customers we have individual contracts as well as contracts that have been commonly negotiated and signed individually by each shipping line." [Translation of German original]. And further (Gothenburg): "Negotiations are done individually with the shipping companies". (105) As an example, P & O Nedlloyd has chosen to establish a hub in Rotterdam; Hapag-Lloyd has instead invested in Hamburg. Both operators are members of the Grand Alliance. The parties themselves point out that there will be no obligation on Grand Alliance members calling at Rotterdam to use the joint ECT/P & O Nedlloyd Euromax facility in that port, even though P & O Nedlloyd may wish them to do so. (106) P & O Nedlloyd (reply to Commission's questionnaire): "... whilst, in theory, it is open to carriers to switch ports to obtain a wider choice of stevedoring service providers, in practice this is difficult. Apart from the issue of lack of port substitutability, the more calls a carrier makes at a given port the more arrangements it will have in place to deal with these calls. [...] Therefore, once a carrier has established ports at which it calls, it becomes economically more difficult for the carrier to switch ports for a significant portion of its cargo and for transhipment activities. Further, as vessel sizes increase, this will bring about a corresponding decline in the number of port calls a carrier will make and this will again serve to increase the importance of the ports of Rotterdam and Felixstowe." And further, CP Ships: "Flexibility is limited as service quality and cost is very much influenced by a lines infrastructure and it can be quite difficult to shift resources, or find new resources, to accommodate a change of ports." (107) In a Lloyd's List special report of 25 April 2001 ("World top container ports", page 6), the managing director of Maersk Benelux (joint venture partner in Maersk Delta) is quoted as saying that the switch of Maersk transhipment volumes from Rotterdam to Bremerhaven "cost a lot of money" (emphasis added) and that there is therefore no guarantee that the volumes diverted to Bremerhaven will return to Rotterdam. This contradicts the notifying parties' assertion that switches of transhipment volumes can be made easily. (108) E-mail of 10 April 2001. (109) It should be recalled that the greater part of the costs of a terminal operator are fixed (infra- and superstructure costs). (110) "Any gain a shipping line achieves from reduced port charges as a result of a switch of port would directly benefit the shipping line concerned as the shipping line would not be able to vary the THC from the level established by the freight conference" (paragraph 168). This implies that the THC is the same in both ports (the port from which the switch is made and the port to which the switch is made). (111) "[The shippers] will choose port by reference to the THCs" (paragraph 167). (112) Maersk Delta (Rotterdam), North Sea terminal (Bremerhaven). Possibly also Southampton (P & O ports) and Aarhus (Maersk). The Altenwerder terminal in Hamburg has a 25 % participation by the Hapag Lloyd shipping line. It is questionable whether Altenwerder should be included in the ranks of jointly (carrier) owned terminals. (113) It should also be noted that these two carriers are tied to Rotterdam through their investment in the European Rail Shuttle, which provides regular shuttle trains (container loaded) to several European destinations, such as Milan, Mainz and Mannheim, Prague and Bratislava. (114) For example, in reaction to an attempt by ECT to increase prices. (115) The Maasvlakte II (approximately 2500 ha) is the only significant capacity development (in Rotterdam) foreseen for the period after 2005.
Article 2 
This decision is addressed to: Rotterdam Container Participatie Maatschappij BV Galvanistraat 15 PO box 6622 3002 AP Rotterdam The Netherlands Hutchison Ports Netherlands BV Nolst Trenité Plaza Weena 666 PO box 190 3000 AD Rotterdam The Netherlands Done at Brussels, 3 July 2001