Kuraray/ Glsv Business
Total Page：16
File Type：pdf, Size：1020Kb
EN Case No COMP/M.7115 - KURARAY/ GLSV BUSINESS Only the English text is available and authentic. REGULATION (EC) No 139/2004 MERGER PROCEDURE Article 6(1)(b) in conjunction with Art 6(2) Date: 29/04/2014 In electronic form on the EUR-Lex website under document number 32014M7115 Office for Publications of the European Union L-2985 Luxembourg EUROPEAN COMMISSION Brussels, 29.4.2014 C(2014) 2946 final In the published version of this decision, some information has been omitted pursuant to Article 17(2) of Council Regulation (EC) No 139/2004 PUBLIC VERSION concerning non-disclosure of business secrets and other confidential information. The omissions are shown thus […]. Where possible the information omitted has been replaced by ranges of figures or a MERGER PROCEDURE general description. To the notifying party: Dear Sir/Madam, Subject: Case M.7115 – Kuraray/ GLSV Business Commission decision pursuant to Article 6(1)(b) in conjunction with Article 6(2) of Council Regulation No 139/20041 1. On 6 March 2014, the Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004 ("the Merger Regulation") by which Kuraray Co., Ltd. ("Kuraray", Japan) acquires within the meaning of Article 3(1)(b) of the Merger Regulation sole control over the Glass Laminating Solutions/Vinyls Business ("GLSV") of E. I. du Pont de Nemours and Company ("DuPont", USA), by way of purchase of assets. Kuraray and GLSV are hereinafter collectively referred to as "the Parties" while Kuraray individually is referred to as "Notifying Party". I. THE PARTIES AND THE OPERATION 2. Kuraray is a manufacturer of specialty chemicals, fibres and other materials, incorporated in Japan and listed on the Tokyo Stock Exchange. Kuraray's main products are functional resins and film (used to produce adhesives, LCD screens, interlayers for laminated safety glass, or food packaging), synthetic isoprene chemical products, synthetic leather, vinylon fibre (a substitute for asbestos), and polyester fibre. 1 OJ L 24, 29.1.2004 p. 1. With effect from 1 December 2009, the Treaty on the Functioning of the European Union ("TFEU") has introduced certain changes, such as the replacement of "Community" by "Union" and "common market" by "internal market". The terminology of the TFEU will be used throughout this decision. Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË Tel: +32 229-91111. Fax: +32 229-64301. E-mail: [email protected]. 3. DuPont is a science and technology company incorporated in Delaware, USA, and listed on the New York Stock Exchange. DuPont is engaged in the R&D, production and sale of a variety of chemical products, plastics, paints, agrochemicals, seeds, nutritional ingredients and other materials. 4. The target, GLSV, wholly owned and controlled by DuPont, is comprised of assets relating to the manufacture and sale of Vinyl Acetate Monomer ("VAM"), Polyvinyl Alcohol ("PVA"), Polyvinyl Butyral ("PVB") resin and PVB film, all forming part of the same vertically-integrated value chain, and DuPont's trademarked interlayer product, Sentryglas. The assets to be acquired include manufacturing equipment, buildings, customer lists, contracts and inventories. All intellectual property required to operate GLSV will be assigned or licensed. 5. According to the Asset Purchase Agreement signed between Kuraray and DuPont on 21 November 2013, Kuraray will acquire sole control over GLSV. Therefore, the proposed transaction constitutes a concentration within the meaning of Article 3(1)(b) of the Merger Regulation. II. EU DIMENSION 6. The operation does not have an EU dimension within the meaning of Article 1 of the Merger Regulation as the aggregate Union-wide turnover achieved by GLSV does not exceed EUR 100 million. 7. However, on 23 December 2013 the operation acquired Union dimension through a referral under Article 4(5) of the Merger Regulation. III. MARKETS CONCERNED BY THE TRANSACTION 8. The markets concerned by this transaction are the markets for (i) VAM, (ii) PVA, (iii) PVB resin and (iv) PVB film. All four markets are part of the same value chain: VAM is used to produce PVA, which is used to produce PVB resin, which in turn is used to produce PVB film. PVB film is then sold to glass manufacturers to be used as an adhesive interlayer in the production of laminated safety glass, for automotive (e.g. windshields) or architecture (e.g. windows) applications. 9. The markets horizontally affected by the transaction concern the production of (i) PVA and (ii) PVB film. Furthermore, the operation would give rise to vertically affected markets between (i) VAM and PVA, and (ii) PVA and PVB resin. IV. HORIZONTALLY AFFECTED MARKETS A. PVA 1. Product market definition 10. PVA is a water-soluble and biodegradable polymer with strong film formation properties and high binding power. PVA is produced in a number of grades and is used in a variety of applications in different industries, including the paper, the textile and pharmaceutical industries. Typically, four PVA grades are distinguished according to their level of hydrolysis: (i) low, (ii) partially, (iii) fully and (iv) super hydrolysed. PVA is the most important raw material for the production of PVB resin, representing 35-50% of PVB resin input costs. PVB resin accounts for 28% of global PVA consumption. The super, fully, and partially hydrolysed 2 PVA grades are referred to as "standard" PVA, as opposed to "specialty" PVA comprising the more specialized grade such as low hydrolysed PVA as well as other special PVA grades (e.g. co-polymer or modified PVA). 11. In its previous decisions, the Commission indicated that the market for PVA might be subdivided into segments based on the level of hydrolysis, i.e. distinguishing the fully hydrolysed grades and partially hydrolysed grades, but ultimately left the definition open. The Commission however concluded that the product market should not be wider than PVA, as PVA does not have any substitutable products.2 12. The Notifying Party submits that PVA constitutes a single product market and should not be segmented any further: while specific grades of PVA are required for specific end use applications, there is a high degree of supply-side substitutability as all PVA producers are able to produce all grades. 13. The information obtained by the Commission in the course of its market investigation indicated that concerning the value chain affected by the proposed transaction, PVB resin can be produced using all standard PVA, i.e. partially, fully and super hydrolysed PVA.3 From the supply-side perspective all grades of PVA (from low to super hydrolysed) are produced using similar production process and raw materials.4 Partially, fully and super hydrolysed PVA (i.e. standard PVA) can even be produced using the same production line.5 The time required to switch production between these different PVA grades would generally be half a day or one day.6 Therefore, the Commission considers that there is a significant degree of supply-side substitution between all grades of PVA and especially grades of standard PVA. 14. However, the precise product market definition regarding PVA can ultimately be left open for the purpose of this Decision, as the outcome of the competitive assessment in the present case would not change irrespective of the precise market definition applied to PVA. 2. Geographic market definition 15. In a previous decision, the Commission considered that the relevant geographic market for PVA is global.7 16. The Notifying Party submits that the relevant geographic market for PVA is worldwide. There are significant trade flows of PVA between world regions and a significant proportion of European demand is met by imports from Japan, China, the United States and Taiwan. In 2 See Commission decision in case COMP/M.3625 Blackstone / Acetex (2005), paragraph 25. In C/0154/09 Sekisui / Celanese (2001), the Spanish Competition authority ultimately left open whether the market should be further distinguished between “standard” PVA (comprising super, fully and partially-hydrolised PVA) and “specialty” PVA (comprising low-hydrolised PVA and copolymer or “modified” PVA). 3 Replies to Questionnaire Q3 – questions 8-9. 4 Replies to Questionnaire Q3 – question 10. Only Sekisui indicated the production process may be different for low hydrolysed PVA. However, Sekisui also agreed that for partially to super hydrolysed PVA the production process and raw materials are very similar. 5 Replies to Questionnaire Q3 – question 11. 6 Replies to Questionnaire Q3 – questions 12-13. 7 See Commission decision in case COMP/M.3625 Blackstone / Acetex (2005), paragraph 82. 3 addition, the transport costs to ship PVA between regions are relatively insignificant (accounting for less that 3-5% of the total sales price). 17. Respondents to the Commission's market investigation also confirmed that most customers source PVA from various regions of the world and that there are no significant barriers to trade for most types of PVA from or into the EEA.8 However, the information obtained by the Commission in the course of its market investigation also revealed that there remain significant price differences between world regions, with PVA being 30-40% more expensive in the EEA than in Asia.9 18. However, the Commission considers that the precise geographic market definition regarding PVA can ultimately be left open for the purpose of this Decision, as the outcome of the competitive assessment in the present case would not change irrespective of the geographic market definition applied to PVA. 3. Competitive assessment 19. The concentration will give rise to a horizontal overlap of the Parties' activities in relation to the market for PVA. The Parties' combined market shares will reach [10-20]% in volume ([20-30]% in value) worldwide.