This Decision is addressed to:
Air Liquide SA 75, Quai d'Orsay F - 75321 Paris Cedex 07
Done at Brussels, 18 January 2000.
For the Commission
Mario Monti
Member of the Commission
(1) OJ L 395, 30.12.1989, p. 1; corrected version in OJ L 257, 21.9.1990, p. 13.
(2) OJ L 180, 9.7.1997, p. 1.
(3) OJ C 79, 30.3.2004.
(4) Case B3-168/98 of 16.12.1998.
(5) Case 98/0050 of 12.1.1999.
(6) Case 1182/4b.84 of 29.12.1998.
(7) Turnover calculated in accordance with Article 5(1) of the merger Regulation and the Commission Notice on the calculation of turnover (OJ C 66, 2.3.1998, p. 25). To the extent that figures include turnover for the period before 1 January 1999, they are calculated on the basis of average ECU exchange rates and translated into EUR on a one-for-one basis.
(8) The turnover figure for Air Liquide includes the turnover of the business acquired from BOC in 1999 in France, Germany, Belgium and the Netherlands (EUR [...]* million).
(9) The turnover figure for BOC includes turnover for the gases businesses to be acquired by Air Liquide.
(10) Parts of this text have been edited to ensure that confidential information is not disclosed; those parts are enclosed in square brackets and marked with an asterisk.
(11) See footnote 8.
(12) In certain cases, other customers may also be served from this air separation unit.
(13) Air Liquide document of 2 June 1999 (submitted to the Federal Trade Commission as part of the HSR filing). The relevant text reads: "Consequences of the transaction: Tonnage - on a national basis, no overlap of parties' activities; on a European basis, combined share would exceed 40 %". The text goes on to assess the transaction's impact "in the EU territory".
(14) Platinum - Decision of 24 April 1997 in Case No IV/M.619 - Gencor/Lonrho, OJ L 11, 14.1.1997, p. 30; primary aluminium - Decision of 28 May 1998 in Case No IV/M.1161 - Alcoa/Alumax; silicon - Decision of 26 January 1999 in Case No IV/M.1330 - Pechiney/Samancor; for other minerals see Decision of 7 December 1995 in Case No IV/M.660 - RTZ/CRA.
(15) Large commercial jet aircraft - Decision of 30 July 1997 in Case No IV/M.877 - Boeing/McDonnell Douglas, OJ L 336, 8.12.1997, p. 16; magnet train systems - Decision of 9 March 1998 in Case No IV/M.987 - Transrapid; electronic connectors - Decision of 8 October 1998 in Case No IV/M.1314 - Framatome/Berg Electronics; pulp dryers - Decision of 8 February 1999 in Case No IV/M.1379 - Valmet/Rauma.
(16) Platinum - Decision of 24 April 1997 in Case No IV/M.619 - Gencor/Lonrho (OJ L 11, 14.1.1997, p. 30) primary aluminium - Decision of 28 May 1998 in Case No IV/M.1161 - Alcoa/Alumax; for other minerals see Decision of 7 December 1995 in Case No IV/M.660 - RTZ/CRA.
(17) Figures for 1998. The market share calculation is based on turnover data (value sales) provided by the suppliers of tonnage gases. Due to the nature of tonnage contracts, value data represent the market position of suppliers more accurately than volume data. For instance, given that take-or-pay arrangements or non-volume-related facility fees are often used, the actual strength of a supplier in relation to its customers and competitors is better reflected by the revenue earned than by the quantities of gases supplied. The parties' combined market share would, in any case, not differ substantially if the calculation were based on volume figures (oxygen - [...]*; nitrogen - [...]*).
(18) The table lists on-site supply contracts for oxygen and nitrogen won during the last five years in the EEA, based on data provided by the parties and by competitors. For the purpose of this comparison, contracts for more than 100 tonnes per day were counted (in line with the distinction proposed by the notifying party, p. 20 of the notification). If smaller volume contracts were to be included, the parties' position would be even stronger. Air Liquide, in particular, is the leading European supplier of small on-site nitrogen facilities.
(19) For instance certain utilities such as pipes etc. Other competitors have to charge the cost of such equipment, the incumbent does not. Customer files reviewed during the investigation illustrate how such savings lead to a procurement decision in favour of the incumbent.
(20) "BOC process systems: Global situation analysis"; document submitted to the Federal Trade Commission as part of the HSR filing.
(21) NatWest Securities, "Industrial Gases 2000", February 1997, p. 73.
(22) There is no tonnage supply in Ireland.
(23) Only in countries to which bulk deliveries could be carried out from French production sites (Belgium, the Netherlands, Luxembourg and to a lesser degree Germany) has a less important local production capability been put in place.
(24) Some of Air Liquide's local distribution pipelines have a capacity of up to [...]* tpd for oxygen and [...]* tpd for nitrogen. Few pipelines have a capacity below [...]* tpd.
(25) In Air Liquide's large pipeline network in Northern France/Belgium, the transfer capacity of interconnecting pipelines ranges from [...]* to [...]* tpd for oxygen whereas nitrogen pipelines are limited to [...]* tpd.
(26) "BOC process systems: Global situation analysis"; document submitted to the Federal Trade Commission as part of the HSR filing.
(27) Anecdotal evidence gathered during the investigation illustrates how a pipeline customer's position can deteriorate. For instance, in the case of one pipeline contract reviewed, various anti-competitive clauses, such as an exclusivity clause, a duration of more than 15 years and a so-called "English clause" (obligation on the customer to submit competing offers to the incumbent supplier) were added during extensions of a long-term contractual relationship.
(28) "Industrial Gas Industry Overview", May 1999, submitted to the United States Federal Trade Commission as part of Air Product's HSR filing.
(29) NatWest Securities, "Industrial Gases 2000", February 1997, p. 73.
(30) See footnote 28.
(31) See footnote 29.
(32) Linde has, however, won a larger number of small on-site contracts (under 100 tpd).
(33) Where smaller on-site plants, based on standard technology (PSA, VPSA, small cryogenic), are needed, the customer may be more able to specify the terms of reference without advice from an industrial gases company. In particular, large multinational companies may be able to draw on their experience with other such plants at different sites, particularly if those plants are not customised to meet specific needs.
(34) In principle, it is conceivable that a customer seeks alternative advice on the project design from several potential suppliers. However, it can be assumed that only very large companies would resort to such a strategy. During the investigation, no case was found in which that approach was used.
(35) There may, of course, be exceptions, such as large "prestige" projects, which several gases companies will be eager to win. This assessment reflects the general tendency.
(36) That view is shared by industry analysts, see for instance NatWest Securities, "Industrial Gases 2000", February 1997, p. 79.
(37) "BOC process systems: Global situation analysis"; document submitted to the Federal Trade Commission as part of the HSR filing.
(38) Figures for 1998, based on the companies' turnover for the products in question.
(39) Annex A.11 to the reply to the statement of objections.
(40) There is no tonnage supply in Ireland.
(41) Oxygen pipelines - [...]** km; nitrogen pipelines - [...]** km.
(42) Overall, the combined entity would supply approximately [...]** of the European demand for industrial gases.
(43) During the financial years 1994/1995 to 1998/1999 (tonnage and bulk business accounted for together).
(44) During the financial years 1994/1995 to 1998/1999.
(45) [...]*.
(46) Note for Air Liquide's Comité des Projets Europe of 28 January 1997 concerning a call for tender by an electronics company for bulk gases (nitrogen, oxygen and argon), cylinder gases (helium and hydrogen) and equipment in which Air Liquide participated.
(47) According to competitors who have entered the United Kingdom market, BOC has, in the past, indeed pursued the strategy of matching their prices by reciprocal price reductions.
(48) Air Liquide has gained leading expertise in key, high technology application areas such as the electronics and chemical industries (NatWest Securities, "Industrial Gases 2000', February 1997, pp. 45 and 73). [...]* of Air Liquide's R & D expenditure are focused on improving the technologies associated with the application of industrial gases in the customers' industries. For example, applications in the field of [...]* account for [...]* of Air Liquide's R& D (figures provided by the notifying party)."
(49) Figures provided by the notifying party, until end 1998.
(50) AGA has sold its limited operations in the United Kingdom.
(51) NatWest Securities, "Industrial Gases 2000", February 1997, p. 57.
(52) Defined as those containing at least 0,3 % helium.
(53) Source:
Chemical Economics Handbook, Helium Data Summary, 1998.
(54) Source: Chemical Economics Handbook, Helium Data Summary, 1998.
(55) Figures for 1998 on the basis of volumes.
(56) The only exception is Messer's rights in the Orenburg source.
(57) Source:
Competitor's estimates.
(58) Source:
Chemical Economics Handbook, Helium Data Summary, 1998.
(59) This is confirmed by a BOC analysis "Global Helium Strategy", 29 August 1997 (provided to the Federal Trade Commission as part of the HSR filing).
(60) See footnote 58.
(61) These market share figures concerning the electronic speciality gases are presented in a number of articles published in specialised periodicals concerning the gas and chemical industry.
