Case No COMP/M.5675- SYNGENTA / MONSANTO's SUNFLOWER SEED BUSINESS REGULATION
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EN This text is made available for information purposes only. A summary of this decision is published in all Community languages in the Official Journal of the European Union. Case No COMP/M.5675- SYNGENTA / MONSANTO'S SUNFLOWER SEED BUSINESS Only the English text is authentic. REGULATION (EC) No 139/2004 MERGER PROCEDURE Article 8 (2) Date: 17/11/2010 EUROPEAN COMMISSION Brussels, 17.11.2010 C(2010) 7929 final PUBLIC VERSION COMMISSION DECISION of 17.11.2010 declaring a concentration to be compatible with the internal market and the EEA Agreement (Case No COMP/M. 5675 – SYNGENTA/MONSANTO'S SUNFLOWER SEED BUSINESS) 2 COMMISSION DECISION of 17.11.2010 declaring a concentration to be compatible with the internal market and the EEA Agreement (Case No COMP/M. 5675 – SYNGENTA/MONSANTO'S SUNFLOWER SEED BUSINESS) (Only the English text is authentic) (Text with EEA relevance) THE EUROPEAN COMMISSION, Having regard to the Treaty on the Functioning of the European Union, Having regard to the Agreement on the European Economic Area, and in particular Article 57 thereof, Having regard to Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings1, and in particular Article 8(2) thereof, Having regard to the Commission's decision of 21 June 2010 to initiate proceedings in this case, Having regard to the opinion of the Advisory Committee on Concentrations2, Having regard to the final report of the Hearing Officer in this case3, WHEREAS: (1) On 28 April 2010, the Commission received a notification concerning a concentration by which the undertaking Syngenta Crop Protection AG (hereinafter "Syngenta" or "the Notifying Party") acquired sole control of the global sunflower seed business of Monsanto Company (hereinafter "Monsanto" or "the Target Business") by way of purchase of assets. Syngenta and the Target Business are jointly referred as "the merging parties". I. THE NOTIFYING PARTY AND THE TARGET BUSINESS (2) Syngenta is a company based in Switzerland active in the agricultural sector, in particular in seeds and crop protection. Syngenta was created by the spin-off and merger of the crop protection business of Novartis AG and AstraZeneca plc and the seed business of Novartis AG in November 2000.4 Syngenta is active on a global basis 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. 2 OJ C 3 OJ C 7929 4 See Commission decision of 26 July 2000 in Case IV/M.1806 – Novartis/AstraZeneca. 3 in sunflower seed. In the Union, it operates one breeding centre located in France and produces sunflower seed in France, Hungary, Romania and Spain. It commercialises sunflower seed in a number of Member States. Syngenta holds an interest of […]* in Maisadour Semences S.A. (hereinafter "Maisadour")5, a French company which is active in sunflower seed markets in Europe. (3) Monsanto Company is a multinational group based in the USA, specialised in agricultural products. The Target Business encompasses all inventories of sunflower seed, germplasm, intellectual property rights, know-how, contracts, commercial data and some employees of Monsanto’s sunflower seed business. The European breeding stations and production sites of Monsanto are excluded from the transaction. The Target Business is not active in sunflower seed treatment products. II. THE OPERATION AND THE CONCENTRATION (4) The transaction consists of the acquisition by Syngenta of Monsanto's sunflower seed business worldwide. With the operation, Syngenta acquired sole control, by way of acquisition of assets, of the sunflower seed business of Monsanto. The transaction is therefore a concentration within the meaning of Article 3 of Regulation (EC) No 139/2004 (hereinafter the "Merger Regulation"). (5) The transaction was completed on 31 August 2009 on a global level. In the Union, the transaction was subject to an obligation of notification in two Member States, namely Spain and in Hungary. According to the information submitted by the Notifying Party, at the time when the latter was informed of the request for referral submitted by Spain, the transaction had been implemented everywhere in the Union except for Spain. III. UNION DIMENSION (6) The concentration does not meet the thresholds of Article 1(2) of the Merger Regulation. While the aggregate worldwide turnover of Syngenta is in excess of EUR 5000 million (Syngenta: EUR […]* million), the aggregate Union-wide turnover of the Target Business is below EUR 250 million (Target Business: EUR […]* million). Nor does the notified concentration meet the thresholds set out in Article 1(3) of the Merger Regulation, since the Target Business does not generate a turnover of more than EUR 25 million in any Member State. The notified concentration therefore does not have a Union dimension within the meaning of Article 1 of the Merger Regulation. (7) The Commission decided to examine the concentration on 12 November 2009 in accordance with Article 22(3) of the Merger Regulation, following a request for referral from Spain of 1 October 2009 pursuant to Article 22(1) of the Merger Regulation, joined by Hungary on 14 October 2009 pursuant to Article 22(2) of the Merger Regulation. * 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. 5 See Commission decision of 30 June 1999 in Case IV/M.1497 – Novartis/Maisadour. 4 IV. THE PROCEDURE (8) On 31 May 2010, the Notifying Party submitted a remedy proposal to address the serious doubts raised by the Commission. (9) By decision dated 21 June 2010, the Commission found that the notified operation raised serious doubts as to its compatibility with the internal market and initiated proceedings pursuant to Article 6(1)(c) of the Merger Regulation. (10) On 2 July 2010, the Notifying Party submitted its written comments on the decision to initiate proceedings pursuant to Article 6(1)(c) of the Merger Regulation. (11) A non-confidential version of certain key submissions of third parties collected during the first phase investigation was provided to the Notifying Party on 9 August 2010. (12) On 18 August 2010, pursuant to Article 10(3) of the Merger Regulation, the Commission, at the request of the Notifying Party, adopted a decision to extend the procedure by ten working days. (13) On 1 September 2010, in order to dispel the serious doubts identified by the Commission, the Notifying Party submitted commitments with a view to rendering the concentration compatible with the internal market as provided for in Article 8(2) of the Merger Regulation. (14) On 2 September 2010, pursuant to Article 10(3) of the Merger Regulation, the Commission, at the request of the Notifying Party, adopted a decision to extend the procedure by ten additional working days. (15) On 17 September 2010, the Notifying Party submitted an improved remedy package. V. OVERVIEW OF THE SUNFLOWER SEED INDUSTRY (16) The transaction concerns the economic sector of sunflower seed. This section provides a brief overview of the sunflower seed industry in Europe as a background for the discussion of market definitions and for the competitive assessment of the transaction. 1. SUNFLOWER SEED FOR PLANTING – THE DIMENSION OF THE INDUSTRY (17) Seeds for planting fall into three broad groups: (i) agricultural crops, (ii) vegetable seeds and (iii) ornamental seeds. Sunflower seed belong to the group of agricultural seeds, a category also comprising maize, wheat, sugar beet and soybean. (18) As the Notifying Party explains, sunflower crop is predominantly used for the production of vegetable oil for food consumption and cooking. Within vegetable oils, sunflower oil is generally considered by customers to be of a higher quality and a healthier cooking alternative to oil produced from other vegetable seeds (such as palm oil and soybean oil). Sunflower oil consumption is high in Europe, with demand for 6 sunflower oil increasing approximately 2-4% per annum. 6 Form CO, p.42. 5 (19) Europe is one of the largest sunflower growing areas in the world. In 2007, the total global sunflower seed industry's turnover was estimated at approximately EUR 400 million of which the Union market accounted for EUR 153 million. In the Union, sunflowers are cultivated on approximately 3,7 million hectares, corresponding to 3,7% of the arable land.7 Sunflowers can only be cultivated in areas with sufficient sunshine. The main sunflower growing Member States are France (with 10% of the global market), Hungary, Spain, Bulgaria and Romania. Other major European sunflower growing countries are Ukraine, Russia and Turkey, which share some similarities, in terms of agro-climatic conditions, with several sunflower growing Member States. (20) Volume sales in sunflower seed are measured in units consisting of 150 000 kernels which contain approximately 10 kilograms of seed. With a unit a farmer can plant up up to 2,5 hectares. Depending on the growing area, one hectare can yield between 1-3 tons of commodity sunflower seed8. On the basis of an average of 500 kernels per sunflower plant, a unit of sunflower seed delivers approximately 5 tonnes commodity sunflower seed. (21) According to the Notifying Party, in Hungary, the total cultivation area of sunflower is approximately 500 000 hectares. In Spain, the total area currently dedicated for the cultivation of sunflower is approximately 750 000 hectares9. The volume of sunflower seed sales in Spain in 2008 was 273 000 units and in Hungary 226 800 units, which represent respectively 17,8% and 14,8% of the total volume sales in the Union (1,54 million units).