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REGULATION (EC) No 139/2004 MERGER PROCEDURE

Article 6(1)(b) NON-OPPOSITION Date: 17/09/2007

In electronic form on the EUR-Lex website under document number 32007M4836

Office for Official Publications of the European Communities L-2985 Luxembourg

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 17 IX 2007

SG-Greffe(2007) D/205486 In the published version of this decision, some information has been omitted pursuant to Article 17(2) of Council Regulation (EC) No 139/2004 concerning non-disclosure of business secrets and other confidential information. The omissions are shown thus […]. Where possible the information omitted has been replaced by ranges of figures or a general description.

PUBLIC VERSION

MERGER PROCEDURE ARTICLE 6(1) (b) DECISION

To the notifying party:

Dear Sir/Madam,

Subject: Case No COMP/M.4836 CVC/Univar Notification of 10.08.2007 pursuant to Article 4 of Council Regulation 1No 139/2004

1.On 10.08.2007, the Commission received a notification of a proposed concentration by which the undertaking Ulysses Luxembourg S.a.r.l. ( "Ulysses" Luxembourg) controlled by CVC Capital Partners Group S.a.r.l. ("CVC", Luxembourg) acquires within the meaning of Article 3(1)(b) of the Council Regulation control of the whole of the undertaking Univar NV ("Univar", The Netherlands) by way of purchase of shares.

2.After examination of the notification, the Commission has concluded that the notified operation falls within the scope of the Merger Regulation and does not significantly impede effective competition in the common market or in a substantial part of it.

I. THE PARTIES AND THE CONCENTRATION

3.Ulysses is a company controlled by CVC Capital Partners (“CVC”). CVC consists of privately owned advisory entities whose activity is providing investment advice to and/or managing investments on behalf of investment funds.

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.

4.Univar is active in the distribution of chemicals. Univar buys from international chemical manufacturers commodity and specialty chemicals and distributes them in 18 countries across Europe. In Europe Univar sells a wide range of around 25,000 different chemicals.

5.The proposed transaction concerns the acquisition by Ulysses, via subsidiaries, of no less than 95% of the shares in Univar. After completion of the public bid CVC will ultimately have sole control over Univar. The notified operation constitutes therefore a concentration within the meaning of Article 3(1)(b) of the Merger Regulation.

II. COMMUNITY DIMENSION

6.The transaction has a Community dimension pursuant to Article 1(2) of the Merger Regulation. The undertakings concerned have a combined aggregate worldwide turnover of more than EUR 5 billion (CVC: EUR […] billion; Univar: EUR […] billion) in 2006. In the Community, CVC achieves EUR […] billion while Univar EUR […] billion. Neither company achieves more than two thirds of its Community wide turnover in one Member State.

III. RELEVANT PRODUCT MARKET

7.None of the current portfolio companies held by CVC is active in a market which is upstream or downstream of the market for the distribution of chemicals. CVC however intends to acquire an international chemicals manufacturer, Taminco.For the purpose of this case it is therefore assumed that Taminco is controlled by CVC. The transaction will give rise to vertical relationships between Taminco a producer of chemicals and Univar a distributor.

8.The European Commission has examined a limited number of the chemicals produced by Taminco. Most of the reportable markets have been, however, examined by the UK Competition Commission in the Taminco/Air Products case.

9.Taminco produces a range of chemical products. A number of these products are amongst the chemicals which Univar distributes. As a distributor of these products Univar operates on a market which is downstream of Taminco’s activities. The vertical overlap between the activities of Taminco and Univar concerns the following products: alkylalkanolamines (‘AAAs’); butylamines; choline chloride (‘CC’); dimethylacetamide (‘DMAc’); dimethylformamide (‘DMF’); ethylamines; methylamines; N-methylpyrrolidone (‘NMP’) and propylamines.

10.In the past the European Commission defined Butylamines and NMP as individual relevant product markets. The UK Competition Commission found AAAs, CC, DMF, Methylamines to constitute a single relevant product market.

11.DMAc is used in a wide range of organic and inorganic compounds as a combined solvent and reaction catalyst. For the purpose of this notification the parties contend that DMAc constitutes a separate relevant product market, which constitutes the narrowest market definition.

12.Ethylamines and Propylamines are higher amines. They are produced in various chemical forms. Although different forms of Ethylamines and Propylamines are used in the manufacture of a wide range of products, the parties contend that each of them constitute a single product market as there is a close supply-side substitutability between the different chemical forms. It is generally possible to vary the ratio of the different ethylamines and propylamines within a plant. Producers are therefore able to switch production to one of the other forms and market them in the short term without incurring additional costs or risks.

13.However, for the purpose of the present case, the precise definition of the relevant product markets can be left open as the transaction would not result in competition concerns irrespective of market definition.

14.The distribution of chemicals by non-manufacturers has been considered as separate activity from the sales of chemicals directly by manufacturers. As regards distribution of chemicals the Commission has distinguished three relevant product markets in chemical distribution: the market for the bulk chemical business (‘trading’); the market for the distribution of commodity chemicals (‘commodities’) and the market for the distribution of specialty chemicals (‘specialties’). Univar operates on the commodity and specialty markets. In any case, the market definition for the distribution of chemicals can be left open as the transaction would not result in competition concerns irrespective of market definition.

IV. Relevant geographic market

15.The European Commission, in previous decisions defined the geographic scope of the market for butylamines and NMP to be the EEA-wide.

16.The UK Competition Commission considered that the market for AAAs, CC, DMF is worldwide, whereas the market for methylamines is EEA wide in scope.

17.The parties contend that the geographic scope of the market for DMAc, ethylamines and propylamines is at least EEA-wide as they are traded extensively and over long distances. Imports from outside the EEA are not affected by transportation or other costs. Those costs are low and do not limit imports.

18.In the previous decisions of the European Commission, the market for distribution of commodity chemicals and specialty chemicals were held to be at least national in scope. The presumption of national markets is driven by the sales structure of the distributors, i.e. they operate warehouses from which they distribute their products to the customers with the usual distribution radius being around 160-480 km. The parties submit that the scope of the geographic market is at least EEA-wide as distributors sell the same product in the whole of EEA and there is no significant national differentiation (no national preferences or conditioning). Nevertheless, for the purpose of the present case where the relationship between upstream supplier and downstream distributor is examined, the geographic market definition for the distribution of chemicals can be left open as the transaction will not give rise to neither input foreclosure nor customer foreclosure irrespective of geographic market definition.

V. Competition assessment

19.Taminco’s market share is higher than 25% in the markets for AAAs and methylamines ([20-30]% and [35-45]% respectively). Univar has market share exceeding 25% in the market for the distribution of one chemical, NMP (approximately [60-70]%).

20.Taminco only sells a small part (less than [0-10]%) of its output through distributors. It sells the vast majority of its products to large industrial end-users through its own sales offices. This business model allows Taminco to keep direct contact with its customers and to capture a larger share of the added value. Only smaller customers are supplied through distributors.

21.The proposed concentration would not enable input foreclosure. The amines (and derivatives) produced by Taminco do not constitute must-stock products for distributors. Even without these products, distributors would be able to offer a credible product portfolio to their customers.

22.Supplies from Taminco to distributors constitute only a small part of the relevant upstream markets. In 2006 Taminco sold approximately [0-10]% of its AAA, approximately [0-10]% of its methylamines and approximately [10-20]% of its NMP via distributors. This corresponds with approximately [0-10]%, [0-10]% and [0-10]% respectively of the relevant AAA, methylamines and NMP merchant markets. If Taminco's products were no longer available to Univar's competitors, they would have sufficient access to alternative sources of supply.

23.From Univar’s perspective there would be no economic incentive to start sourcing products exclusively from Taminco. Univar distributes approximately 25,000 chemical products whereas Taminco manufactures around 70 (intermediate) chemicals. Taminco’s competitors (in particular BASF) produce a wider range of products. If Univar were to start sourcing amines (and derivatives) exclusively from Taminco, BASF (and other competing suppliers) could react by applying less favourable terms and conditions to Univar for other products. For a distributor such as Univar – which is dependent on producers from which it sources the different products in its portfolio – a preferential treatment of one supplier would be dangerous because it could harm the relationship with other suppliers.

24.The proposed concentration would not enable customer foreclosure. First, as noted above sales by distributors constitute only a small fraction of overall merchant sales of the chemicals concerned (no more than [0-10]%), as manufacturers prefer direct sales to customers. Therefore the transaction does not create a risk of impeding access of manufacturers to a significant customer base. Moreover, post-merger there would be sufficient alternative number of distributors for upstream competitors of Taminco to sell their output. Univar has an estimated market share of approximately [0-10]% on the European market for the distribution of commodity and specialty chemicals. In any case there are credible alternative distributors for Taminco’s competitors, including Brenntag, PENTA, Azelis, Helm and Biesterfeld and all the chemicals concerned are sourced by distributors on the EEA-wide basis.

25.For AAA, Taminco’s competitors with at least a 5% market share are BASF ([20-30]%), DOW ([10-20]%) and Huntsman ([5-15]%). For methylamines Taminco’s competitors with at least a 5% market share are BASF (25-35]%), Balchem ([5-15]%) and Ertisa ([0-5]%). For NMP Taminco market share is [5-15]%, therefore below the level indicating competition concerns.

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VI. CONCLUSION

26.For the above reasons, the Commission has decided not to oppose the notified operation and to declare it compatible with the common market and with the EEA Agreement. This decision is adopted in application of Article 6(1)(b) of Council Regulation (EC) No 139/2004.

For the Commission,

[signed]

Neelie KROES Member of the Commission

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