EUROPEAN COMMISSION DG Competition

Only the English text is available and authentic.

REGULATION (EC) No 139/2004 MERGER PROCEDURE

Article 4(4) Date: 25/06/2024

EUROPEAN COMMISSION

Brussels, 25.6.2024 C(2024) 4538 final

PUBLIC VERSION

SAS Shipping Agencies Services S.à.r.l. 11B Boulevard Joseph II L-1840 Luxembourg Luxembourg

Italian Competition Authority Piazza G. Verdi, 6/A, 00198 Rome Italy

Date of filing: 21.05.2024 Legal deadline for response of Member States: 11.06.2024 Legal deadline for the Commission decision under Article 4(4): 25.06.2024

1OJ 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.

2OJ L 1, 3.1.1994, p. 3 (the ‘EEA Agreement’).

Commission européenne/Europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË - Tel. +32 22991111

Dear Sir or Madam,

1. I NTRODUCTION

(1) On 21 May 2024, the Commission received by means of a Reasoned Submission a referral request pursuant to Article 4(4) of the Merger Regulation with respect to the transaction cited above. The parties request the operation to be examined in its entirety by the competent authority of Italy.

(2) According to Article 4(4) of the Merger Regulation, before a formal notification has been made to the Commission, the parties to the transaction may request that their transaction be referred in whole or in part from the Commission to a Member State, where the concentration may significantly affect competition in a market within that Member State which presents all the characteristics of a distinct market.

(3) A copy of this Reasoned Submission was transmitted to all Member States on 21 May 2024.

(4) Italy, did not express its agreement or disagreement as regards the request to refer the case within 15 working days of receiving the submission and is therefore 3 deemed to have agreed to the proposed referral.( )

2. T HE PARTIES

(5) MSC Mediterranean Shipping Company Holding S.A. (‘MSC’), established in Switzerland, is the ultimate holding company of the MSC group, a privately owned global business engaged in the transport and logistics sector, primarily active in the ocean liner shipping business. In the EEA, the MSC Group is primarily active in passenger and freight transport services in the Mediterranean Sea, terminal services, harbour towage services, tour operator and travel agency services, inland transportation and logistics solutions.

(6) SAS Shipping Agencies Services S.à.r.l. (‘SAS’), is a wholly owned subsidiary of MSC, incorporated under the laws of the Grand Duchy of Luxembourg. SAS, through its subsidiaries, is active worldwide in the terminal container and logistics businesses, as well as in the field of ferries activities and other activities directly related to the maritime industry in the Mediterranean Sea.

(7) Moby S.p.A. (‘Moby’), is active in the sector of scheduled maritime transport of passengers, with or without vehicles, and freight, through a fleet of ships of different sizes and capacity. Moby’s shares are currently held by Onorato Armatori S.r.l. (‘Onorato’, 51%) and SAS (49%).

(8) MSC and Moby together are referred to below as the ‘Parties’.

3. T HE O PERATION AND C ONCENTRATION

(9) In December 2023, MSC (through SAS) loaned EUR […] million to Moby, and 4 Onorato acts as guarantor ( ) towards SAS for the fulfilment of Moby’s obligations

3Merger Regulation, Article 4(4), second paragraph.

relating to the loan. In particular, should Moby and Onorato fail to repay the 5 loan, () SAS could exercise a purchase option over Onorato’s shares in Moby which would lead SAS to be Moby’s majority shareholder. The Reasoned Submission is made on the basis of SAS’s good faith intention to enforce its contractual rights should Moby’s financial situation deteriorate thus jeopardizing the reimbursement of SAS’s loan which could lead SAS to acquire the shares in Moby it does not already own and become Moby’s majority shareholder (the ‘Proposed Transaction’). MSC submits that the Transaction involves the acquisition of sole control over Moby, by MSC (through SAS).

(10) The Commission notes that in the past years Moby has faced a situation of financial distress and on several occasions was unable to pay its debt without external assistance. Therefore, regardless of the situation prevailing before the exercise of the purchase option, the Commission considers that exercising the purchase option by MSC is sufficiently likely. Considering that Moby may not be 6 able to fulfil its obligations relating to the loan, ( ) it is appropriate to examine the Proposed Transaction based on MSC’s good faith intention to enforce its contractual rights.

(11) According to the Reasoned Submission, to avoid filing for bankruptcy, in 2020 Moby submitted to the Tribunal of Milan a composition plan and proposal (‘piano e proposta di concordato’ or ‘Concordato’) to reach an agreement with its creditors. In this context, a capital increase underwritten by MSC in Moby, up to the amount of EUR 150 million facilitated the signing of an agreement between Moby and certain of its creditors aimed at the reimbursement of Moby’s debts toward banks and bondholders pursuant to two composition plans. Following a sharp increase in the bunker price, Moby was unable to meet the obligations under the Concordato and, as a result, asked MSC to acquire part of Moby’s debts, amounting to EUR […] million, from its creditors. In the context of this acquisition a further haircut was negotiated with Moby’s creditors (EUR […] million). Moby has agreed to repay its debt towards MSC within […] by several steps, including: (a) divesting 2 vessels to MSC (EUR […] million) by […]; (b) reimbursement of EUR […] million in two instalments, first reimbursement of EUR […] million within […], and a second reimbursement of EUR […] million within […]. In addition, ongoing arbitration proceedings initiated by third parties and regarding two of Moby’s vessels were not disclosed to MSC at the time of the debts acquisition and may put into question the value of Moby and require the immediate repayment of the entire amount of the loan and early enforcement of MSC’s pledge and option rights.

(12) Based on the above, the Proposed Transaction therefore would consist in the acquisition of sole control within the meaning of Article 3(1)(b) of the Merger Regulation by MSC over Moby.

4 Pursuant to […].

5 Due within […] months from […].

6 As Onorato was Moby’s majority share holder throughout the events described in paragraph (11), the Commission considers that it is sufficiently likely that Onorato, like Moby, would not fulfil its obligations relating to the loan.

4. EU DIMENSION

(13) The Parties have a combined aggregate world-wide turnover of more than EUR 7 8 5 000 million (MSC: over EUR […] million; () and Moby: EUR […] million ()). Each of the Parties achieved Union-wide turnover in excess of EUR 250 million (MSC: over EUR […] million; () and Moby: EUR […] million ( )). The Parties do not each achieve more than two thirds of their EU-wide turnover within one and the same Member State. The notified operation therefore has an EU dimension within the meaning of Article 1(2) of the Merger Regulation.

5. ASSESSMENT

(14) On the basis of assessment of the information provided by the Parties in the Reasoned Submission, the Proposed Transaction is an appropriate candidate for a pre-filing referral in its entirety from the Commission to the Italian Competition Authority (Autorità Garante della Concorrenza e del Mercato, the ‘AGCM’) in accordance with Article 4(4) of the Merger Regulation.

(15) The Proposed Transaction meets the legal requirements set out in Article 4(4) of the Merger Regulation. It is a concentration within the meaning of Article 3(1)(b) of the Merger Regulation, it has an EU dimension and it may significantly affect competition in Italy.

(16) The assessment suggests that the principal effects of the proposed operation would be restricted to Italy. Further, the markets in question present all the characteristics of distinct national markets.

5.1. Relevant markets

(17) Both MSC and Moby are active, directly or through their subsidiaries, in passenger and freight transport services by ferries in Italy. Scheduled maritime transport of passengers and freight is usually provided through mixed cargo/passenger ferries known as Roll-on/roll-off passenger (‘Ro-Pax’), ( ) or (for freight only) on cargo ferries known as Roll-on/roll-off (‘Ro-Ro’), ( ) on specific routes.

(18) In relation to passenger and freight transport services, Moby is only active in Ro-Pax transport services on routes within Italy and does not provide Ro-Ro transport services. MSC is also active in Ro-Pax transport services on routes wihin Italy, as well as in Ro-Ro transport services and lift-on/lift-off (‘Lo-Lo’) transport services on routes within Italy and on routes from and to Italy.

7Year of turnover: 2022.

8Year of turnover:2023.

9Year of turnover: 2022.

10Year of turnover: 2023.

11Ro-Pax describes a Ro-Ro vessel built for freight vehicle transport along with passenger accommodation. In particular, Ro-Pax vessels are ferries with a roll-on/roll-off auto deck and passenger capacity for transporting wheeled cargo, such as cars, motorcycles, trucks, semi-trailers, buses, trailers, etc.

12Ro-Ro ships are ferry ships designed for transport by the mode of embarking and disembarkation of wheeled vehicles (on their own wheels), and cargo, arranged on flatbeds or in containers, loaded and unloaded by means of wheeled vehicles independently and without the aid of external mechanical means. This is in contrast to lift-on/lift-off (‘Lo-Lo’) ships, which use a crane to load and unload cargo.

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5.1.1. Passengers and freight transport services

(19) As regards the product market definition, MSC submits that the relevant market is not limited to Ro-Pax transport services, but also includes at least Ro-Ro transport services as far as freight is concerned and airline services as far as passengers are concerned.

(20) With respect to passenger transport services by ferry, the Commission has previously considered a separate market for the scheduled maritime transport of passengers by ferry, also referred to as the provision of ferry/shipping services overall. ( ) The Commission has considered but ultimately left open the question (i) whether this includes both passenger and freight ferry services; (ii) whether this includes both Ro-Ro and Lo-Lo services; and (iii) whether this includes both business and tourist passengers. ( ) With respect to freight, the Commission has previously considered, but ultimately left open a market for unitised freight services (maritime services and door-to-door intermodal services). ( ) With respect to freight transport on Ro-Ro and Ro-Pax, the Commission has previously considered that freight transport on Ro-Ro and Ro-Pax vessels forms part of the same product market. The Commission has left open the question (i) whether Lo-Lo forms part of the same market, and (ii) whether the freight transport on cruise vessels is in the same relevant market as the freight transport on Ro-Ro and Ro-Pax vessels. ( )

(21) The AGCM has previously identified a separate product market for the ‘scheduled transport service of passengers, with or without vehicles, and goods’, which “connects two ports on a frequent and regular basis, has specific characteristics such as the regularity of the service, timetables and pre-established tariffs, which distinguish it from other methods of maritime transport of goods (such as transport carried out with container ships or ships carrying railway carriages) (…)” ( ).

(22) In any event, for the purposes of the Commission’s assessment under Article 4(4) of the Merger Regulation, the precise scope of the product market can be left open, as the Proposed Transaction gives rise to affected markets for passenger and freight transport services by ferry under the widest plausible market definition.

(23) As regards the geographic market definition, MSC submits that the passenger and freight shipping markets should be defined on the basis of routes/trades, defined by the range of ports which are served at both ends of the service (for example, Ports in the Northern and Central Italy; Ports in the Northern Sardinia; Ports in the Central and Southern Italy; Ports in Sicily).

(24) The Commission has previously considered that the markets for scheduled maritime transport of passengers by ferry should be examined on an Origin and Destination (O&D) basis. () The Commission has also considered, but ultimately left open the question, whether these markets should be examined by relevant corridors. ( ) As for freight transport services, the cases assessed by the Commission concerned mainly inter-state shipping routes, where the Commission examined freight transport on Ro-Ro and Ro-Pax based on geographic corridors. ( )

(25) Similarly, with specific reference to the Italian market, the AGCM examined the geographic scope for passenger and freight transport services in a number of cases. In particular, the AGCM stated that “the geographic scope of the market is given by the single route served or bundles of routes between ports that are considered substitutable from a demand perspective”. ( )

(26) In any event, for the purposes of the Commission’s preliminary assessment under Article 4(4) of the Merger Regulation, the precise scope of the geographic market can be left open, because the Transaction gives rise to affected markets only in Italy. For the sake of completeness even if certain freight transport services markets were to be considered as wider-than-national, the Proposed Transaction is unlikely to affect competition outside of Italy.

5.2. Assessment of the referral request

5.2.1. Legal requirements

(27) According to the Commission Notice on case referral, in order for a referral to be made by the Commission to one or more Member States pursuant to Article 4(4), the following two legal requirements must be fulfilled:

(a) there must be indications that the concentration may significantly affect competition in a market or markets, ( ) and

(b) the market(s) in question must be within a Member State and present all the characteristics of a distinct market. ( )

(28) With regard to the first requirement (a), according to paragraph 17 of the Commission Notice on Case Referral, the existence of an affected market () is generally considered sufficient to meet the requirement set forth in Article 4(4) of the Merger Regulation.

(29) With regard to the second requirement (b), according to paragraph 18 of the Commission Notice the requesting parties are required to show that a geographic market in which competition is affected by the transaction is national, or narrower than national in scope.

(30) Furthermore, pursuant to point 20 of the Notice, concentrations the effects of which are likely to be confined to, or have their main economic impact in a single Member State, are the most appropriate candidate cases for referral to that Member State.

5.2.1.1. The concentration may significantly affect competition

(31) On the basis of the information provided in the Reasoned Submission, the Proposed Transaction would give rise to horizontally affected markets and also to vertical overlaps in Italy.

(32) According to MSC, the Proposed Transaction will lead to horizontally affected markets of passengers and freight transport services on Ro-Pax ships on four Italian routes: (i) Civitavecchia-Olbia; (ii) Genoa-Olbia; (iii) Genoa-Porto Torres, and (iv) Napoli-Palermo.( )

(33) The Parties’ 2023 combined market shares in the affected markets, as estimated by the Parties, are set out in Table 1 below.

Table 1: Market shares in transport of passengers and freight on Ro-Pax in 2023

Combined market share

Value/Volume

Value Volume Value Volume

Transport of passengers on Ro-Pax on the route Civitavecchia-Olbia

Transport of freight on Ro-Pax on the route Civitavecchia-Olbia

Transport of passengers on Ro-Pax on the route Genoa-Olbia

Transport of freight on Ro-Pax on the route Genoa-Olbia

Transport of passengers on Ro-Pax on the route Genoa-Porto Torres

Transport of freight on Ro-Pax on the route Genoa-Porto Torres

Transport of passengers on Ro-Pax on the route Naples-Palermo

Transport of freight on Ro-Pax on the route Naples-Palermo

(34) MSC further submits that the Proposed Transaction will give rise to vertical links between upstream passenger and/or freight terminal services and the downstream passenger and/or freight transport services.

(35) According to MSC, the Proposed Transaction may lead to the following up-stream markets in which MSC is active being vertically affected by the Proposed Transaction: (i) passengers and freight terminal services in the Naples catchment area, ( ) (ii) passengers and freight terminal services in the Genoa catchment area, ( ) and (iii) passengers and freight terminal services in the Palermo catchment area. ( ) MSC was unable to provide market share estimates for these vertically affected markets. However, as noted in footnotes 26 to 28, these markets are vertically linked to the markets listed in Table 1 above (among others), where the Parties have combined market shares above 30%, thus, potentially making them vertically affected irrespective of the precise market share held in the upstream markets for the provision of passengers and freight terminal services. Considering that, as explained in paragraph (33), several plausible markets are horizontally affected by the Proposed Transaction, the Commission will not further assess these potential vertical overlaps which do not lead to affected markets outside of Italy.

(36) Therefore, the first legal requirement set forth in Article 4(4) of the Merger Regulation appears to be met.

5.2.1.2. Distinct markets within a Member State

(37) The relevant markets present all the characteristics of distinct markets. As outlined above, the Parties are active in relevant geographic markets that have been assessed based on origin and destination in the Commission’s and the AGCM’s precedents. The geographic markets affected by the Proposed Transaction are all within Italy.

(38) Therefore, the second legal requirement set forth by article 4(4) of the Merger Regulation also appears to be met.

5.2.2. Additional factors

(39) In addition to the verification of the legal requirements, point 19 of the Notice provides that it should also be considered whether referral of the case is appropriate, and in particular “whether the competition authority or authorities to which they are contemplating requesting the referral of the case is the most appropriate authority for dealing with the case. To this end, consideration should be given in turn both to the likely locus of the competitive effects of the transaction and to how appropriate the national competition authority (NCA) would be for scrutinising the operation.”

(40) In addition, point 23 of the Notice states that “[c]onsideration should also, to the extent possible, be given to whether the NCA(s) to which referral of the case is contemplated may possess specific expertise concerning local markets, or be examining, or about to examine, another transaction in the sector concerned”.

(41) First, with regard to the focus of the competitive effects, the Proposed Transaction would give rise to, among others, several plausible potentially affected markets that are not wider than national in scope and that are located in Italy. According to MSC, there are no potential affected markets outside of the Italian territory.

(42) Second, the AGCM has considerable experience in assessing cases dealing with the relevant markets, from investigating recent transactions, including some involving MOBY and its subsidiary CIN and is therefore well equipped to assess the impact of the Proposed Transaction on competition in the markets in question. ( )

(43) Third, a referral of the Proposed Transaction to the AGCM satisfies the need to preserve the benefit of the ‘one-stop-shop’ as there are no affected markets outside of Italy. The case would thus be referred in its entirety to a single competition authority (i.e. the AGCM), which is an important factor of administrative efficiency.

5.2.3. Conclusion on referral

(44) On the basis of the information provided by the parties in the Reasoned Submission, the case meets the legal requirements set out in Article 4(4) of the Merger Regulation in that the concentration may significantly affect competition in markets within Italy which present all the characteristics of distinct markets.

(45) Moreover, the requested referral would be consistent with points 19–23 of the Notice, in particular, because the AGCM is the most appropriate authority to examine the Proposed Transaction.

29 See: AGCM cases C12005 – Onorato Partecipazioni-NewCo/Moby-Compagnia Italiana di Navigazione, and A487 – Compagnia Italiana di Navigazione.

6. CONCLUSION

(46) For the above reasons, and given that Italy’s agreement can be presumed, the Commission has decided to refer the Proposed Transaction in its entirety to be examined by the AGCM. This decision is adopted in application of Article 4(4) of the Merger Regulation and Article 57 of the EEA Agreement.

For the Commission

(Signed) Olivier GUERSENT Director-General

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