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Towers Perrin/ Watson Wyatt EN Case No COMP/M.5597 - TOWERS PERRIN/ WATSON WYATT 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: 03/12/2009 In electronic form on the EUR-Lex website under document number 32009M5597 Office for Publications of the European Union L-2985 Luxembourg EUROPEAN COMMISSION Brussels, 3.12.2009 SG-Greffe(2009) D/10938-10939 C(2009) 9893 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 other confidential information. The omissions are MERGER PROCEDURE shown thus […]. Where possible the information ARTICLE 6(1)(b) DECISION IN omitted has been replaced by ranges of figures or a CONJUNCTION WITH general description. ARTICLE 6(2) To the notifying parties: Dear Sir/Madam, Subject: Case No COMP/M.5597 – Towers Perrin/ Watson Wyatt Notification of 14.10.2009 pursuant to Article 4 of Council Regulation No 139/20041 1. On 14 October 2009, the European Commission ("the Commission") received a notification of a proposed concentration pursuant to Article 4, and following a referral pursuant to Article 4(5), of Council Regulation (EC) No 139/2004 (the "Merger Regulation") by which the undertaking Towers, Perrin, Forster & Crosby, Inc., ("Towers Perrin", U.S.) enters into a full merger within the meaning of Article 3(1)(a) of the Merger Regulation with Watson Wyatt Worldwide, Inc. ("Watson Wyatt", U.S.). I. THE PARTIES AND THE OPERATION 2. Watson Wyatt is a global consulting firm providing human capital and financial management consulting services, mainly focusing on retirement benefits, pensions administration, investment consulting, human capital services as well as insurance and financial services consulting in 34 countries, including Austria, Belgium, France, Germany, Ireland, Italy, Portugal, Spain, Sweden, the Netherlands, and the UK. 3. Towers Perrin provides human capital and financial management consulting services, mainly in the areas of retirement benefits, investment consulting, human capital consulting (including surveys), investment consulting, insurance and financial services 1 OJ L 24, 29.1.2004 p. 1. Commission européenne, B-1049 Bruxelles / Europese Commissie, B-1049 Brussel - Belgium. Telephone: (32-2) 299 11 11. consulting, and reinsurance broking services in 27 countries, including Belgium, France, Germany, Ireland, Italy, the Netherlands, Spain, and the UK. II. CONCENTRATION 4. The concentration is a merger of equals of all activities of Watson Wyatt and Towers Perrin (together "the Parties") within the meaning of Article 3(1)(a) of the Merger Regulation. III. EUROPEAN UNION DIMENSION 5. The operation does not have a European Union dimension within the meaning of Article 1 of the Merger Regulation2. The proposed transaction does not meet the thresholds of Article 1(2) of the Merger Regulation as the Parties' aggregate worldwide turnover is […], i.e. below EUR 2 500 million. The proposed transaction also does not meet the turnover thresholds of Article 1(3) of the Merger Regulation. 6. On 14 August 2009, the Commission received, by means of a reasoned submission, a referral request pursuant to Article 4(5) with respect to the transaction based on the consideration that the transaction would otherwise be subject to review under the national merger control regimes of Germany, the Netherlands, Spain and the UK. A copy of this submission was transmitted to the Member States on 17 August 2009. 7. The case fulfils the two conditions set out in Article 4(5) of the Merger Regulation, since (i) the transaction is a concentration within the meaning of Article 4(5) of the Merger Regulation, and (ii) the proposed concentration is capable of being reviewed under the national competition laws of at least three Member States. 8. As none of the Member States competent to review the transaction expressed their disagreement as regards the request to refer the case to the Commission, the transaction falls within the jurisdiction of the Commission pursuant to the Article 4 (5) referral request filed by the Parties. IV. COMPETITIVE ASSESSMENT 9. The Parties provide that they are active within human capital and financial management consulting services, mainly and more specifically in the areas of (a) retirement benefits and pension administration, (b) insurance and financial services consulting, (c) investment consulting and (d) human capital consulting, including surveys. 2 The terminology of the Regulation is here and elsewhere adapted following the entry into force on 1 December 2009 of the Treaty of Lisbon amending the Treaty on European Union and the Treaty establishing the European Community. 2 A. RETIREMENT BENEFITS CONSULTING AND PENSIONS ADMINISTRATION 1. Relevant product markets 10. The Parties recognized that retirement benefits consulting might constitute a separate product market, consisting of consulting and actuarial services to corporations, trustee bodies and other entities regarding retirement and health benefits for employees' pension funds. These services include inter alia: plan design and implementation, actuarial and financial valuations, retirement risk management, due diligence process, research, market surveys and benchmarking studies, pension fund management, compliance and administration of funds and other actuarial services. 11. The market investigation confirmed that retirement benefits consulting constitutes a separate product market due to the specific knowledge required to be active in this field. 12. The Parties also indicated that they were active in the area of pensions administration, which consists of facilities to allow scheme members to access their fund balances and to perform certain operations via for example websites. Taking into consideration that the Parties provide advice on retirement benefits, it was considered whether pensions administration might constitute a follow-on market to retirement benefits, provided largely or exclusively to clients of the latter. 13. The replies to the market investigation showed that retirement benefits consulting and pensions administration constitute separate markets, because different skills are required to perform these activities. For retirement benefits the main skill required is, as described above, specific knowledge in the area of pension funds, while, IT systems and IT knowledge play a vital role in the area of pensions administration. Also, the market investigation suggested that there might be different providers for these two services: consulting firms for retirement benefits with IT companies playing a much greater role in pensions administration. 2. Relevant geographic markets 14. The Parties submit that the geographic market for retirement benefits consulting, just as several of the other markets where the Parties are active, has both national and international aspects, due to the frequent cross-border nature of the Parties business on the one hand and the need for local knowledge of national pension regulations on the other. Consequently, the Parties provided market share estimations on both levels – national and EEA-wide. 15. The market investigation confirmed that the geographic scope of retirement benefits consulting has both national and international characteristics. The national aspect, as suggested by the Parties, is linked to the knowledge of national pension systems required to operate on this market. However, the market investigation also indicated that the retirement benefits consulting market could have some aspects which are broader than national as large multinational companies purchasing these services would require a service offering covering a number of countries, in particular with regard to the need to reconcile pension accounting with a single underlying set of accounting standards. 3 16. The market investigation suggested that the geographic market for the pensions administration market could be more national in scope than retirement benefits consulting in view of the fact that pension administration systems depend on local regulatory frameworks and factors such as social security or tax rules. 17. For the assessment of the present transaction, the exact geographic market definition can, however, be left open as no serious doubts arise as to the compatibility of the notified transaction with the internal market on either market, irrespective of the geographic market definition adopted. 3. Competitive Assessment Retirement benefits consulting 18. According to the data provided by the Parties, their combined market shares on the market of retirement benefits consulting would be below [30-40%] in all the affected markets on the assumption that such markets were national in scope, including in Belgium, Germany and the Netherlands, where the highest range of market shares has been estimated. 19. According to the market investigation, the Parties' combined market share in Belgium would be around [20-30%]and they would face important competitors such as AON, Mercer and Conac with market shares of around 10-30% each. 20. In Germany, the market investigation confirmed that the Parties' combined market share would be around [20-30%]post transaction. Mercer would remain the largest player with a market share above 30% and other competitors would be present on the market such as Hewitt with around [10-20%] market share. 21. In the Netherlands, the combined market share of the Parties
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