Case No COMP/M.6885 - SDNV/ GERMANISCHER LLOYD
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EN Case No COMP/M.6885 - SDNV/ GERMANISCHER LLOYD Only the English text is available and authentic. REGULATION (EC) No 139/2004 MERGER PROCEDURE Article 6(1)(b) NON-OPPOSITION Date: 15/07/2013 In electronic form on the EUR-Lex website under document number 32013M6885 Office for Publications of the European Union L-2985 Luxembourg EUROPEAN COMMISSION Brussels, 15.7.2013 C(2013) 4588 final In the published version of this decision, some information has been omitted pursuant to Article PUBLIC VERSION 17(2) of Council Regulation (EC) No 139/2004 concerning non-disclosure of business secrets and MERGER PROCEDURE other confidential information. The omissions are shown thus […]. Where possible the information omitted has been replaced by ranges of figures or a general description. To the notifying party: Dear Sir/Madam, Subject: Case No COMP/M.6885 - SDNV/ Germanischer Lloyd Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/20041 (1) On 10 June 2013, the Commission received a notification of a proposed concentration pursuant to Article 4 and following a referral pursuant to Article 4(5) of the Merger Regulation by which Stiftelsen Det Norske Veritas ("SDNV", Norway) acquires within the meaning of Article 3(1)(b) of the Merger Regulation sole control of Germanischer Lloyd SE ("GL", Germany) by way of purchase of shares2 (hereinafter "the proposed transaction" and SDNV and GL are designated as the "Parties"). 1. THE PARTIES (2) SDNV is a foundation, which through its subsidiaries, provides inter alia testing, inspection, certification/verification/classification services and related consulting services in the following main sectors: (i) maritime (ship classification services), (ii) oil & gas, (iii) energy & sustainability and (iv) business assurance services. (3) GL provides various services of testing, inspection, certification/verification/classification and consulting for the following main sectors: (i) maritime (ship classification services), (ii) oil & gas, (iii) renewables. It is a subsidiary of Mayfair Vermögensverwaltungs SE 1 OJ L 24, 29.1.2004, p. 1 ("the Merger Regulation"). 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 Publication in the Official Journal of the European Union No C 170, 15.06.2013, p. 45. Commission européenne, 1049 Bruxelles, BELGIQUE / Europese Commissie, 1049 Brussel, BELGIË. Tel.: +32 229-91111. ("Mayfair", Germany), which is a private investor holding company investing in long-term participations in companies and real estate, among other investments. 2. THE OPERATION (4) Pursuant to the Combination Agreement of 20 December 2012, SDNV proposes to acquire GL from Mayfair and combine it with its subsidiary DNV Group AS, to be renamed DNV GL Group AS (the "JV"). In exchange, Mayfair will receive 36.5% of the shares in that JV. All important decisions regarding strategic matters of the company (budget, business plan, etc.) will be taken at the level of DNV GL Group. (5) The Board of Directors of the JV will be composed of […] members: […] appointed by SDNV, […] by Mayfair and […] by the JV's employees3. The Board of Directors decides on all matters which are not explicitly vested with the shareholders or other governing bodies of the JV; its role is to "direct and oversee the activities of [the JV]" and to "approve [the JV's] business plan, financial plan and budgets"4. The Board of Directors takes decisions […], thus none of the Parties has a clear majority or a veto on its decisions5. Nevertheless, there are certain elements indicating that SDNV will be able to exercise sole control over the JV. First, SDNV will have […] out of […] votes in the Board of Directors of the JV and, in case of a tie, the chairman appointed by SDNV will have a casting vote. Second, if the powers of the employee representatives are left aside, SDNV has a […] majority in the Board of Directors with […] out of […] votes. If the powers of the employee representatives are taken into account, their role appears to reinforce the powers of SDNV for two reasons: (i) they are subject to instructions given by the general meeting of shareholders in which SDNV has a clear majority; (ii) during the past […] calendar years, in the […] board meetings of SDNV, there have been no cases where the employee representatives have voted against the shareholders' representatives of SDNV. According to the Parties, this practice of seeking consensus is likely to continue. (6) Consequently, the proposed transaction of GL by SDNV constitutes a concentration within the meaning of Article 3(1)(b) of the Merger Regulation. 3. EU DIMENSION (7) The notified concentration does not have a Union dimension but was notifiable in Germany, Lithuania, Poland and the United Kingdom. The Parties have requested the Commission to examine the concentration pursuant to Article 4(5) of the Merger Regulation. The Member States competent to examine the concentration did not within 15 working days express their disagreement to the request for referral. Thus, the Commission decided to examine the concentration since the legal requirements for a referral were met. 3 [Document bringing about the concentration]. 4 [Document bringing about the concentration]. 5 [Document bringing about the concentration]. 2 4. RELEVANT MARKETS (8) Both SDNV and GL are active in the field of risk management and provide testing, inspection, certification/verification/classification ("TIC") services, as well as consulting services, particularly ship classification services, on a global basis. (9) TIC services consist in testing, verification, inspection, auditing and certification services done by public and private suppliers to the public and private sectors. TIC services are an objective assessment of the quality and safety of what is being tested aimed at reassuring customers, consumers and end-users that a manufacturer has followed national and/or international regulations and/or industry standards that ensure quality, environmental protection and public health and safety. Testing, inspection and certification services generally overlap because they are highly interrelated. For example, a testing or certification service often has an integral inspection element. These services can be applied to any product, service or company independently of the sector. (10) As regards distinguishing TIC services from consultancy services, the Commission's market investigation broadly indicated that, both from the supply side and the demand side, respondents would combine testing, inspection and certification services, regardless of the sector concerned, although the legal requirements to be able to offer each type of services may differ depending on the industry sector concerned. However, they would indeed separate consultancy services, since they are generally provided by different companies, in particular to avoid conflict of interests. As regards distinguishing these services by industry sectors, the results of the market investigation are mixed, both on the supply side and the demand side. The main well-established TIC services providers are all active in a number of sectors, such as maritime, oil & gas and renewable energies. They consider that the core service (TIC) is the same, but the distinction lies in the level of technical knowledge and capabilities in each sector. Generally, respondents identified maritime, oil & gas and renewable energies as relevant sectors that can be distinguished. (11) Within the TIC and consultancy services, the Parties' activities overlap in a number of business segments, but the proposed transaction only leads to horizontally affected markets if one considers the following product and geographic market: (a) the worldwide market for TIC services (in particular ship classification) in the maritime sector, (b) the EEA market for TIC services in the renewable energy sector, in particular the wind turbine certification segment, and (c) the EEA market for TIC services in the oil & gas business sector. 4.1. TIC services (in particular ship classification) in the maritime sector 4.1.1. Relevant product market (12) SDNV and GL are both classification societies. Classification societies provide independent classification services6 and statutory services in accordance with the relevant international 6 Article 2(i) of Regulation (EC) No 391/2009 of the European Parliament and of the Council of 23 April 2009 on common rules and standards for ship inspection and survey organisations. 3 conventions7, as well as assistance to the maritime industry. They develop and apply their own rules and procedures8, and if selected by a vessel owner or ship building yard, certify the adherence of the ship to the society's rules. They also verify compliance with international and/or national statutory regulations on behalf of flag administrations. The vast majority of commercial ships are built to, and surveyed for compliance with, the rules and procedures laid down by classification societies. (13) In a previous antitrust case, the Commission has taken the view that there is a separate market for classification services for merchant ships, which encompasses the production of technical standards ("rules and procedures") for ship construction, equipment, maintenance and inspection; the verification of plans and the supervision of the ship