Merger control: Schwenk Zement appeals Commission decision to open Phase II investigation into the acquisition of Cemex Croatia jointly with HeidelbergCement

On 27 February, the Official Journal published details of an appeal by Schwenk Zement ("Schwenk") against a Commission decision from 10 October 2016. In that decision, the Commission initiated an in-depth Phase II investigation into the joint acquisition of Cemex Croatia by Schwenk and HeidelbergCement. Schwenk and HeidelbergCement are both German construction material producers. Together they jointly control Duna Dráva Cement ("DDC"), a Hungarian company that is the largest cement importer in Croatia. Cemex Croatia, the largest cement producer in Croatia, is a subsidiary of the Cemex Group, also a global construction material supplier. As reported earlier, HeidelbergCement has also appealed the decision.

Schwenk and HeidelbergCement plan to acquire, via DDC, assets in Croatia and Hungary that currently belong to Cemex. Schwenk claims the Commission does not have jurisdiction to review the proposed transaction. According to Schwenk the Commission erred in considering it an undertaking concerned and thereby considering the transaction to have so-called Community Dimension. In addition, Schwenk claims that the Commission wrongly applied paragraph 147 of the Consolidated Jurisdictional Notice (according to which. when a joint venture can be regarded as a mere vehicle for an acquisition by the parent companies, the parent companies can be considered to be the undertakings concerned, rather than the joint venture) by failing to give reasons for its applications.

Source: Case T-907/16 Schwenk Zement v Commission, Official Journal C 063/45, 27 February 2017

Merger control: Commission approves acquisition of ABB's High Voltage Cable and Cable Accessories Businesses by NKT

On 27 February 2017, the Commission approved the acquisition of ABB's high voltage cable and cable accessories businesses by NKT. Both NKT and ABB's high voltage cable businesses develop and supply power cables and cable accessories.

The Commission examined both the effects on competition of removing one competitor and also whether the transaction would make it more likely that the remaining players could coordinate competitive behavior. The second assessment was made in light of the industry's history of collusion, i.e., the Commission found in 2014 that the main producers of high voltage power cables, including NKT and ABB, were involved in a cartel meant to restrict competition for high voltage underground and submarine power cable projects. The producers had agreed on market and customer allocation. The cartel involved Japanese and Korean producers refraining from competing for projects in the EEA, thus staying out of the European companies' home territory.

After investigating the parties' overlapping high voltage power cable activities, in particular, on AC submarine power cables and DC submarine power cables, the Commission concluded that the proposed acquisition would not result in a significant reduction in competition and that a number of strong competitors will remain. The Commission also found that the recent successful entry of competitors from Asia has helped to drive and ensure competition in the relevant markets. Consequently, the Commission approved the proposed truncation.

Source: Commission Press Release 27/02/2017