Vj-40/2001/
VJ-40/2001
ACQUISITION OF CONTROL OVER HOLLAND CHEMICAL INTERNATIONAL BV BY STINNES AG
(Concentration)
Summary
The Competition Council cleared the acquisition of control over Holland Chemical International BV by Stinnes AG (hereinafter: Stinnes).
The parties
65.6% of the shares of the German Stinnes is owned by the German E.ON AG which directly or indirectly controls several undertakings in the energy, chemical and forwarding business (hereinafter: E.ON Group). The aggregate annual turnover of the E.ON Group realised in Hungary was 170 billion HUF in 2000.
HCI and the undertakings controlled directly or indirectly by HCI (hereinafter: HCI Group) are active on the market of storage, processing and distribution of chemicals. The HCI Vegyészeti Anyagok Kereskedelmi Kft (hereinafter: HCI), as a member of the HCI Group realised an annual turnover of 3.7 billion HUF in 1999.
The parties` position on the market
The E.ON Group and the HCI Group have overlapping activities regarding the distribution of chemicals. On behalf of the E.ON Group Neuber Hungária Kereskedelmi Kft (hereinafter: Neuber), on behalf of the HCI Group HCI operates on the Hungarian market by distributing several hundreds of products out of nearly 1000, constituting the product-group of chemicals. There are only four products marketed in parallel by Neuber and HCI. The number of other market players comparable to Neuber and HCI is 10 to 15, while there are around 50 smaller undertakings too. No significant barriers to entry or exit exist on the market, even natural persons with sufficient experience could act as distributor of chemicals. None of the distributors markets the whole range of chemicals, but they can restructure their supply without significant difficulties. Bulky chemical products are usually marketed ex store or directly, including special demands.
The application
The Competition Council decided to apply the new rules of the Act on the Prohibition of Unfair and Restrictive Market Practices (Act No. LVII of 1996 amended by Act No. CXXXVIII of 2000, hereinafter: Competition Act). Although the parties are foreign undertakings, through Hungarian members of the group of undertakings the concentration may have effects in Hungary, therefore it falls into the scope of the Competition Act. The aggregate annual turnover of the parties concerned was 173.7 billion HUF, the annual turnover of the undertaking getting under control was 3.7 billion HUF, which exceeded the threshold laid down in the Competition Act, therefore the concentration was subject to authorisation.
The decision
The Competition Office may not refuse the authorisation of a concentration which does not create or strengthen a dominant position, does not impede the formation, development or continuation of effective competition. The relevant geographical market is the territory of Hungary. Regarding the relevant product market, considering demand substitution the different chemicals are not substitutes, otherwise from the distributors` point of view there is supply substitution. Supply substitution could be limited by the different methods of distribution (ex store, direct, special demands), however the Competition Council found that the parties` total market share of 10-15% in connection with the distribution forms did not raise any concerns.
According to the Competition Act in the course of the control of a concentration a decision on the merits of the case shall be made within 45 days, where granting authorisation for the concentration may clearly not be refused pursuant to Article 30(2). The Competition Act does not give a definition of "clearly not refusable", it follows however from the reference to Article 30(2) that a concentration could be cleared this way, if it clearly does not create or strengthen a dominant position. The Competition Council found that the 15% total market share of the parties justified choosing the "short procedure". The Competition Council stated that even in the case of low market shares the "short procedure" was justified only when the determination of the relevant market does not raise any difficulties.