EN This text is made available for information purposes only. A summary of this decision is published in all EU languages in the Official Journal of the European Union. Case No COMP/M.6360 - NYNAS/ SHELL/ HARBURG REFINERY Only the English text is authentic. REGULATION (EC) No 139/2004 MERGER PROCEDURE Article 8 (1) Date: 02/09/2013 EN EN Brussels, 2.9.2013 C(2013) 5594 final PUBLIC VERSION COMMISSION DECISION of 02/09/2013 addressed to: NYNAS AB declaring a concentration to be compatible with the internal market and the EEA Agreement (Case No COMP/M.6360 - NYNAS/ SHELL/ HARBURG REFINERY) (Only the English version is authentic) TABLE OF CONTENTS 1. THE NOTIFICATION ................................................................................................. 7 2. THE PARTIES ............................................................................................................. 7 3. THE CONCENTRATION ........................................................................................... 8 4. UNION DIMENSION ................................................................................................. 9 5. THE PROCEDURE ..................................................................................................... 9 6. MARKET DEFINITION ........................................................................................... 10 6.1. The industry ............................................................................................................... 10 6.2. The relevant product markets ..................................................................................... 11 6.2.1. Principles .................................................................................................................... 11 6.2.2. Naphthenic base and process oils ............................................................................... 11 6.2.2.1 Base oil vs. process oil ................................................................................................. 13 6.2.2.1.1. The view of Nynas ................................................................................................... 13 6.2.2.1.2. The Commission’s assessment ................................................................................. 13 6.2.2.1.3. Conclusion ................................................................................................................ 14 6.2.2.2. Segmentation by American Petroleum Institute ("API") group .................................. 14 6.2.2.2.1. The view of Nynas ................................................................................................... 14 6.2.2.2.2. Commission's assessment ......................................................................................... 15 6.2.2.2.3. Conclusion ................................................................................................................ 16 6.2.2.3. Segmentation between naphthenic and paraffinic base and process oils .................... 17 6.2.2.3.1. The view of Nynas ................................................................................................... 17 6.2.2.3.1.1. Demand side substitutability ................................................................................. 17 6.2.2.3.1.2. Supply side substitutability ................................................................................... 18 6.2.2.3.2. Commission’s assessment ........................................................................................ 19 6.2.2.3.2.1. Demand side substitutability ................................................................................. 19 6.2.2.3.2.2. Supply side substitutability ................................................................................... 24 6.2.2.3.2.3. Price premium correlation study of Nynas ............................................................ 25 6.2.2.3.3. Conclusion ................................................................................................................ 27 6.2.2.4. Segmentation by end-application ................................................................................ 28 6.2.2.4.1. The view of Nynas ................................................................................................... 28 6.2.2.4.2. The Commission’s assessment ................................................................................. 28 6.2.2.4.3. Conclusion ................................................................................................................ 29 6.2.2.5. Gas to Liquid ("GtL) oil vs. naphthenic base and process oils ................................... 29 6.2.2.5.1. The view of Nynas ................................................................................................... 29 6.2.2.5.2. The Commission’s assessment ................................................................................. 29 EN 2 EN 6.2.2.5.3. Conclusion ................................................................................................................ 31 6.2.3. Transformer oil (TFO) ............................................................................................... 31 6.2.3.1 TFO vs. base and process oils ...................................................................................... 32 6.2.3.1.1. The view of Nynas ................................................................................................... 32 6.2.3.1.2. The Commission's view ........................................................................................... 32 6.2.3.1.3. Conclusion ................................................................................................................ 32 6.2.3.2 Segmentation into unused and reclaimed TFO ............................................................ 32 6.2.3.2.1. The view of Nynas ................................................................................................... 32 6.2.3.2.2. The Commission’s view ........................................................................................... 32 6.2.3.2.3. Conclusion ................................................................................................................ 33 6.2.3.3. Segmentation into inhibited and uninhibited TFO ...................................................... 33 6.2.3.3.1. The view of Nynas ................................................................................................... 33 6.2.3.3.2. The Commission’s view ........................................................................................... 33 6.2.3.3.3. Conclusion ................................................................................................................ 34 6.2.3.4. Segmentation based on the type of base oil used ........................................................ 34 6.2.3.4.1. The view of Nynas ................................................................................................... 34 6.2.3.4.2. The Commission’s view ........................................................................................... 35 6.2.3.4.3. Conclusion ................................................................................................................ 36 6.3. Relevant geographic markets ..................................................................................... 36 6.3.1. Principles .................................................................................................................... 36 6.3.2. Naphthenic base and process oils ............................................................................... 36 6.3.2.1. The view of Nynas ...................................................................................................... 36 6.3.2.2. The Commission's assessment .................................................................................... 38 6.3.2.3. Conclusion ................................................................................................................... 47 6.3.3. Transformer oils (TFO) .............................................................................................. 47 6.3.3.1. The view of Nynas ...................................................................................................... 47 6.3.3.2. The Commission's assessment .................................................................................... 48 6.3.3.3. Conclusion ................................................................................................................... 51 7. COMPETITIVE ASSESSMENT............................................................................... 51 7.1. Competitive structure – naphthenic base and process oils ......................................... 51 7.1.1. The main players ........................................................................................................ 51 7.1.1.1. Nynas ........................................................................................................................... 52 7.1.1.2. Shell ............................................................................................................................. 52 7.1.1.3. Ergon ........................................................................................................................... 52 7.1.2. Evolution of demand .................................................................................................. 53 EN 3 EN 7.1.3. Evolution of supply ...................................................................................................