EUROPEAN COMMISSION DG Competition

Only the English text is available and authentic.

REGULATION (EC) No 139/2004 MERGER PROCEDURE

Article 4(4) Date: 22/06/2023

EUROPEAN COMMISSION

Brussels, 22.6.2023 C(2023) 4339 final

PUBLIC VERSION

FEGA & Schmitt Elektrogroßhandel GmbH Rettistr. 5 91522 Ansbach Germany

Polish Competition Authority Pl. Powstańców Warszawy 1 00-950 – Warsaw Poland

Date of filing: 05.06.2023 Legal deadline for response of Member States: 26.06.2023 Legal deadline for the Commission decision under Article 4(4): 10.07.2023

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. INTRODUCTION

(1) On 5 June 2023, 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 authorities of Poland.

(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 the Member State where the concentration may significantly affect competition and which present all the characteristics of a distinct market.

(3) A copy of this Reasoned Submission was transmitted to all Member States on 5 June 2023.

(4) By e-mail of 12 June 2023, the Polish National Competition Authority (‘NCA’), as the competent authority of Poland, informed the Commission that Poland agrees with the proposed referral.

2. THE PARTIES

(5) Adolf Würth GmbH & Co. KG (‘Würth’ or the ‘Notifying Party’, Germany) is active in the wholesale distribution of products and systems manufactured by third parties mainly to professional end users in trade and industry, including electrical installation, industrial automation, cables and wires, tools, data and network technology, lighting and illumination, household appliances and multimedia products, as well as electrical domestic heating technology and regenerative power generation.

(6) TIM S.A. (‘TIM’, Poland) is active in the wholesale distribution of electrical products and provision of logistic services in Poland.

(7) Würth and TIM are hereinafter together referred to as the ‘Parties’.

3. THE OPERATION AND CONCENTRATION

(8) The proposed transaction involves the acquisition of sole control by Würth over TIM. On 20 April 2023, Würth, through its wholly-owned subsidiary FEGA & Schmitt Elektrogroßhandel GmbH, launched a voluntary tender offer for the acquisition of all of TIM’s shares.

4. EU DIMENSION

(9) The undertakings concerned have a combined aggregate worldwide turnover of more than EUR 5 000 million (Würth: € 19 950 million and TIM: € 309 million)

3The voluntary tender offer has been launched to all TIM's shareholders with condition precedent to its execution being, inter alia, an acceptance of the voluntary tender offer by shareholders combining for at least 50% shareholding and the obtention of the merger control clearance. Form RS, paragraph 33.

and each of them has an EU-wide turnover in excess of EUR 250 million (Würth: € […] million and TIM: € 309 million). Würth does not achieve more than two-thirds of its aggregate Union-wide turnover within one Member State.

(10) The proposed transaction therefore has an EU dimension within the meaning of Article 1(2) of the Merger Regulation.

5. ASSESSMENT

(11) The proposed transaction results in horizontally affected markets in the wholesale distribution and procurement of electrical products in Poland. The proposed transaction does not give rise to any affected markets outside of Poland.

5.1. Relevant product markets

5.1.1. Downstream market for the wholesale distribution of electrical products.

(12) In past decisions, the Commission identified the relevant market as the wholesale distribution of electrical components to electrical installers, builders and other users, and found that the supply of electrical (or installation) products by wholesalers constitutes a distinct product market (not including direct sales by manufacturers or retailers).

4The Commission did not distinguish among the different ranges of products because wholesalers have to respond to the demand of customers, thus they need to provide a one-stop shopping facility.

(13) The Notifying Party agrees with the product market definition stemming from the Commission's past practice and believes it is the most appropriate also with respect to the Polish market.

(14) For the purposes of the Commission’s assessment under Article 4(4) of the Merger Regulation, the Commission considers that, in line with its precedents, the market for the wholesale distribution of electrical products should not be further segmented.

5.1.2. Upstream market for the procurement of electrical products

(15) In past decisions, the Commission found that procurement markets include the sales of electrical products from manufacturers to a variety of customers including wholesalers and DIY stores.

8The Commission’s practice has been to define procurement markets by distinguishing product families or ranges. This is due to the fact that suppliers generally manufacture a limited number of categories of products which are subject to very different competitive conditions.

(16) The Notifying Party submits that the market for the procurement of electrical products should not be further segmented by product families or ranges.

(17) In light of the above, the Commission considers that the market for the procurement of electrical products can plausibly be further sub-segmented by families or ranges. However, the Commission considers that the precise scope of the product market can be left open, as the first condition of Article 4(4) of the Merger Regulation is met under one plausible product market definition (i.e. by product category).

5.2. Relevant geographic market

5.2.1. Downstream market for the wholesale distribution of electrical products

(18) In past decisions, the Commission has in general considered the market for the wholesale distribution of electrical products to be national in scope. The Commission took into account e.g. national distribution policies in terms of available product range, pricing, marketing strategy and pricing policy, lower transportation costs as well as the relevance of factors pointing to narrower geographic markets.

10The Commission also considered whether the geographic dimension of markets for the wholesale of electrical products could be defined as narrower than national but ultimately left the question open.

(19) In the Notifying Party’s view, the geographic market for wholesale distribution of electrical products should be defined as at least national in scope.

(20) For the purposes of the Commission’s assessment under Article 4(4) of the Merger Regulation, the Commission considers that the precise scope of the geographic market can be left open, as the first condition of Article 4(4) of the Merger Regulation is met under all plausible geographic market definitions (i.e. national and local).

5.2.2. Upstream market for the procurement of electrical products

(21) In past decisions, the Commission considered the geographic market for the procurement of electrical products as national in scope as it reflected national specificities regarding products, standards, installation rules and habits, labels or prices.

12The Notifying Party considers that some elements point towards the existence of procurement markets being wider than national but ultimately agrees with the geographic market definition stemming from the Commission's past practice.

(23) For the purposes of the Commission’s assessment under Article 4(4) of the Merger Regulation, the Commission considers that, in line with its precedents, the market for the procurement of electrical products and its plausible sub-segmentations are national in scope.

5.3. Assessment of the referral request

5.3.1. Legal requirements

(24) 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.

5.3.1.1. The proposed transaction may significantly affect competition in a market or markets

(25) According to paragraph 17 of the Notice, the existence of an affected market is generally considered sufficient to meet the requirement set forth in Article 4(4) of the Merger Regulation.

(26) The proposed transaction results in several horizontally affected markets in Poland.

(27) On the market for the wholesale distribution of electrical products in Poland, the Parties would hold a combined market share comprised between [20-30]%. () The proposed transaction would also give rise to affected markets at local level due to the Parties’ overlapping presence in several areas of Poland, with combined market shares comprised between [20-30]% and [30-40]%. ( )

14Commission decision of 18 May 2017 in Case No COMP/M.8469 – SONEPAR ITALIA /SACCHI, paragraph 20; Commission decision of 8 February in Case No COMP/M.5029 – SONEPAR / REXEL GERMANY, paragraph 26; Commission decision of 10 October 2001 in Case No COMP/M.2283 – SCHNEIDER/LEGRAND, paragraph 52.

15Form RS, paragraphs 121 and 132.

16See the Commission’s Notice on Case Referral in respect of concentrations (OJ C 56, 5.3.2005, p. 2) (the “Notice”).

17Further developed in point 17 of the Notice.

18Further developed in point 18 of the Notice.

19Form RS, paragraphs 135 and 166.

20Form RS, paragraph 171.

(28) On the market for the procurement of electrical products, the proposed transaction would give rise to affected markets in Poland only if the market were to be segmented by product category. ( )

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

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

(30) According to paragraph 18 of the Notice, the second requirement set forth by Article 4(4) of the Merger Regulation is satisfied if the geographic scope of the markets where competition is affected is national or narrower than national.

(31) As indicated above, the markets for the wholesale (downstream) and procurement (upstream) of electrical products contain local elements and have been defined as national or narrower than national in scope by the Commission.

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

5.3.2. Additional factors

(33) In addition to the verification of the legal requirements, paragraph 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 to which the Parties are contemplating requesting the referral of the case is the most appropriate authority for dealing with the case. Paragraph 23 of the Notice further states that consideration should also, to the extent possible, be given to whether the national competition authorities to which the referral of the case is contemplated may possess specific expertise concerning local markets.

(34) First, the Polish NCA has specific expertise in the assessment of markets in the sector concerned. Indeed, the Polish NCA has recently reviewed several concentrations in the wholesale distribution of electrical products in Poland, including one concentration involving Würth. ( )

22For example, the Polish NCA approved the acquisition of Kaczmarek by Würth in 2021 and Grodno's acquisitions of BaRGo sp. z o.o. in 2016 and Magma sp. z o.o. in 2018. Form RS, paragraph 62.

(35) Second, in light of the information submitted in the Reasoned Submission by the Parties, the Commission considers that the effects of the proposed transaction are confined to Poland either at a national or sub-national level. Thus, the case may require investigative efforts at local level for which the Polish NCA seems better placed to conduct. Specifically, the main customers in the market for the wholesale of electrical products are resellers and installation/construction companies, () and therefore a market investigation carried out by the Polish NCA appears to be better suited to properly reach the demand side of this market and to understand its main characteristics.

21Form RS, Section 3.3. The Notifying Party note however the difficulties to estimate market shares for the market for the procurement of electrical products in Poland and submits that the market shares provided are its best estimates.

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

5.3.3. Conclusion on referral

(37) In the light of the foregoing and on the basis of the information provided by the Parties in the Reasoned Submission, the Commission concludes that 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 a Member State which present all the characteristics of distinct markets.

(38) Moreover, the requested referral would be consistent with paragraphs 19-23 of the Notice, in particular because the Polish NCA appears to be the most appropriate authority to examine the proposed transaction.

6. CONCLUSION

(39) For the above reasons, and given that Poland has expressed its agreement, the Commission has decided to refer the proposed transaction in its entirety to be examined by Poland. 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

7