Report on the Completed Acquisition of Wincor Nixdorf AG by Diebold, Incorporated
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Diebold and Wincor A report on the completed acquisition of Wincor Nixdorf AG by Diebold, Incorporated 16 March 2017 © Crown copyright 2017 You may reuse this information (not including logos) free of charge in any format or medium, under the terms of the Open Government Licence. To view this licence, visit www.nationalarchives.gov.uk/doc/open-government- licence/ or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: [email protected]. Website: www.gov.uk/cma Members of the Competition and Markets Authority who conducted this inquiry Martin Cave (Chair of the Group) Sarah Chambers Roger Finbow Robert Spedding Acting Chief Executive of the Competition and Markets Authority Andrea Coscelli The Competition and Markets Authority has excluded from this published version of the report information which the Inquiry Group considers should be excluded having regard to the three considerations set out in section 244 of the Enterprise Act 2002 (specified information: considerations relevant to disclosure). The omissions are indicated by []. Some numbers have been replaced by a range. These are shown in square brackets. Non-sensitive wording is also indicated in square brackets. Contents Page Summary .................................................................................................................... 3 Findings .................................................................................................................... 10 1. The reference ..................................................................................................... 10 2. The Parties and the industry in which they operate ............................................ 11 Diebold ................................................................................................................ 11 Diebold’s UK operations ................................................................................ 11 Wincor ................................................................................................................. 12 Wincor’s UK operations ................................................................................. 13 Industry products and services ........................................................................... 13 ATM hardware ............................................................................................... 14 ATM software ................................................................................................ 15 Maintenance and business services .............................................................. 16 Industry trends ............................................................................................... 17 Other ATM suppliers ........................................................................................... 18 NCR ............................................................................................................... 18 Hyosung ........................................................................................................ 18 GRG Banking Equipment Co, Ltd (GRGB) .................................................... 19 GRGI ............................................................................................................. 19 Triton ............................................................................................................. 20 Other ............................................................................................................. 20 Other relevant suppliers ...................................................................................... 20 Customers .......................................................................................................... 21 3. The merger and relevant merger situation .......................................................... 23 The merger ......................................................................................................... 23 Rationale for the merger ..................................................................................... 23 Jurisdiction .......................................................................................................... 25 Enterprises ceasing to be distinct .................................................................. 25 Turnover test ................................................................................................. 25 Conclusions on jurisdiction ............................................................................ 26 4. Market definition.................................................................................................. 26 Product market.................................................................................................... 27 Substitutability of customer-operated ATMs with teller-assist ATMs (TCDs and TCRs) ........................................................................................................... 29 Substitutability of customer-operated ATMs with kiosks ................................ 32 Segmentation of the supply of customer-operated ATMs .............................. 32 Conclusions on product market definition ...................................................... 38 Geographic market ............................................................................................. 38 Conclusion on market definition .......................................................................... 39 5. Counterfactual..................................................................................................... 39 Conclusions on the counterfactual ...................................................................... 42 6. Assessment of the competitive effects of the merger.......................................... 42 The nature of pre-merger competition ................................................................. 43 Tender structure ............................................................................................ 43 Conclusion on the nature of pre-merger competition ..................................... 48 Theory of harm.................................................................................................... 49 Current market position ................................................................................. 50 Competitive interactions ...................................................................................... 53 Past tenders .................................................................................................. 53 1 Internal documents ........................................................................................ 54 Conclusion on competitive interactions ......................................................... 58 Customers’ views on competitiveness of suppliers ............................................. 58 Customers’ views on the merger......................................................................... 60 Other issues raised by the Parties ................................................................. 61 Conclusions on the effect of the merger ............................................................. 63 7. Countervailing factors ......................................................................................... 64 Entry and expansion ........................................................................................... 64 History of entry and expansion ...................................................................... 66 Barriers to entry and expansion ..................................................................... 67 Likelihood, timeliness and sufficiency of entry/expansion .............................. 73 Parties’ response to our provisional findings ................................................. 79 Conclusions on entry and expansion ............................................................. 80 Buyer power ........................................................................................................ 81 Possible buyer power strategies .................................................................... 82 Efficiencies .......................................................................................................... 88 8. Conclusions on the SLC test ............................................................................... 89 9. Remedies ............................................................................................................ 89 Remedy options .................................................................................................. 91 Assessment of the effectiveness of a structural remedy ..................................... 93 Parties’ and third parties’ views on effectiveness .......................................... 93 Composition of the divestiture package ......................................................... 94 Identity of the business to be divested ........................................................... 98 Suitable purchasers ..................................................................................... 100 Parties’ and third parties’ views ................................................................... 100 Effective divestiture process ........................................................................ 103 Conclusion on structural remedy ................................................................. 104 Assessment of the effectiveness of a behavioural remedy ............................... 106 The Parties’ undertakings