Case M.7061 - Huntsman Corporation / Equity Interests Held by Rockwood Holdings
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EUROPEAN COMMISSION DG Competition CASE M.7061 - HUNTSMAN CORPORATION / EQUITY INTERESTS HELD BY ROCKWOOD HOLDINGS (Only the English text is authentic) MERGER PROCEDURE REGULATION (EC) 139/2004 Article 8(2) Regulation (EC) 139/2004 Date: 10.09.2014 This text is made available for information purposes only. A summary of this decision is published in all EU languages in the Official Journal of the European Union. 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. EN EN EUROPEAN COMMISSION Brussels, 10.9.2014 C(2014) 6319 final COMMISSION DECISION of 10.9.2014 addressed to: - HUNTSMAN CORPORATION declaring a concentration to be compatible with the internal market and the EEA agreement (Case M.7061 - HUNTSMAN CORPORATION / EQUITY INTERESTS HELD BY ROCKWOOD HOLDINGS) (Only the English text is authentic) EN EN TABLE OF CONTENTS 1. Introduction .................................................................................................................. 8 2. The operation and the concentration ............................................................................ 8 3. Union Dimension ......................................................................................................... 9 4. The procedure ............................................................................................................... 9 5. Introduction to the TiO2 industry ............................................................................... 10 5.1. TiO2 value chain ......................................................................................................... 10 5.2. Commission's decisional practice in relation to the titanium dioxide markets .......... 13 5.2.1. Relevant product markets ........................................................................................... 13 5.2.2. Relevant geographic markets ..................................................................................... 14 5.3. Notifying Party's views .............................................................................................. 15 5.3.1. Relevant product markets ........................................................................................... 15 5.3.2. Relevant geographic markets ..................................................................................... 16 5.3.3. Competitive assessment ............................................................................................. 17 5.4. The Commission's assessment ................................................................................... 17 6. Market for TiO2 for printing ink applications ............................................................ 19 6.1. Relevant product markets ........................................................................................... 19 6.1.1. EEA printing ink manufacturers do not consider chloride-based TiO2 grades as a substitute to sulphate-based TiO2 grades ................................................................... 19 6.1.1.1. The majority of EEA printing ink manufacturers use sulphate-based TiO2 grades ... 19 6.1.1.2. Sulphate-based TiO2 is better suited to match the requirements of the printing ink manufacturers in the EEA .......................................................................................... 20 6.1.1.3. The majority of the EEA printing ink manufacturers would not switch to chloride- based TiO2 grades in case of small but significant and non-transitory increase in price (SSNIP) ...................................................................................................................... 22 6.1.1.4. There is no supply-side substitutability between sulphate-based and chloride-based TiO2 ............................................................................................................................ 22 6.1.1.5. Conclusion.................................................................................................................. 24 6.1.2. There is no demand-side substitutability between TiO2 for printing ink applications and TiO2 for other applications .................................................................................. 24 6.1.2.1. Various TiO2 applications require different grades ................................................... 24 6.1.2.2. TiO2 for printing ink applications requires specific technical characteristics which are different from the requirements of TiO2 for coatings and other applications. ..... 25 6.1.2.3. The majority of the EEA printing ink manufacturers, including the biggest EEA ink manufacturers, use dedicated TiO2 grades ................................................................. 27 6.1.2.4. If any, there is only one-way substitutability between ink grades and coatings grades .................................................................................................................................... 28 6.1.2.5. None of the EEA printing ink manufacturers would switch to coating grades in case of a small but significant and non-transitory increase in price (SSNIP) .................... 30 EN 2 EN 6.1.2.6. Conclusion.................................................................................................................. 31 6.1.3. There is no supply-side substitutability between TiO2 for printing ink applications and TiO2 for coating applications .............................................................................. 31 6.1.3.1. The production of TiO2 for printing ink applications requires specific know-how ... 31 6.1.3.2. None of the TiO2 manufacturers that are currently not active in TiO2 for printing ink applications would switch its production to ink grades in case of a small but significant and non-transitory increase in price (SSNIP). .......................................... 34 6.1.3.3. Conclusion.................................................................................................................. 35 6.1.4. Quantitative analysis of TiO2 prices for printing ink and coating applications ......... 35 6.1.4.1. The Notifying Party's submissions ............................................................................. 35 6.1.4.2. The Commission's assessment ................................................................................... 36 6.1.4.3. Conclusion.................................................................................................................. 39 6.1.5. Conclusion on product market definition ................................................................... 40 6.2. Relevant geographic markets ..................................................................................... 40 6.2.1. Import duties and transport costs are no barriers to international TiO2 trade ............ 40 6.2.1.1. The trade flows of overall TiO2 ................................................................................. 41 6.2.2. TiO2 for printing ink applications trade flows ........................................................... 42 6.2.3. Independent industry sources and Parties' internal documents report on TiO2 regionally .................................................................................................................... 43 6.2.4. The demand characteristics and the competitive landscape in the TiO2 for printing ink applications differ across the world regions ........................................................ 43 6.2.5. Negotiations between suppliers and printing ink manufacturers have regional scope .................................................................................................................................... 44 6.2.6. Price levels differ across geographic regions ............................................................. 45 6.2.7. Geographic proximity of suppliers plays a role for customers .................................. 47 6.2.8. Conclusion on geographic market definition ............................................................. 48 6.3. Competitive assessment ............................................................................................. 48 6.3.1. Notifying Party's views .............................................................................................. 48 6.3.2. Framework of analysis ............................................................................................... 48 6.3.3. Structure of supply ..................................................................................................... 50 6.3.3.1. Capacity ...................................................................................................................... 50 6.3.3.2. Sales of TiO2 for printing ink applications in the EEA .............................................. 51 6.3.4. Structure of the demand and purchasing patterns ...................................................... 52 6.3.5. Huntsman and Sachtleben are close competitors in the EEA market for TiO2 for printing ink applications ............................................................................................. 54 6.3.5.1. Huntsman and Sachtleben are market leaders and close competitors ........................ 54 6.3.5.2. Pre-merger Huntsman and Sachtleben exert a significant competitive constraint on each other ................................................................................................................... 57 6.3.6. Kronos is a more distant competitor .........................................................................