Article 2
This Decision is addressed to: 1. Société Européenne des Produits Réfractaires Les Miroirs - 18 Avenue d'Alsace F-92096 Paris - La Défense Cedex 2. Elektroschmelzwerk Kempten GmbH Hanns-Seidel-Platz 4 D-81737 München 3. NV NOM PO Box 424 NL-9700 AK Groningen Done at Brussels, 4 December 1996. For the Commission Karel VAN MIERT Member of the Commission (1) OJ L 395, 30. 12. 1989; corrigendum: OJ L 257, 21. 9. 1990, p. 13. (2) OJ C 274, 10. 9. 1997. (3) Saint-Gobain holds 20,5 % of the capital directly and 79,4 % indirectly via its subsidiary Vertec. (4) In the published version of the Decision, some information has been omitted, pursuant to the provisions of Article 17 (2) of Council Regulation (EEC) No 4064/89 concerning non-disclosure of business secrets (hereinafter indicated by [. . .]). However, for a better understanding of the text, exact figures have been replaced by ranges or some general information has been given in a footnote in those cases where it was possible to do so without violating the non-disclosure requirement for business secrets. (5) Wacker-Chemie owns 99,67 % of ESK's share capital. (6) See Case IV/M.284 - Hoechst/Wacker, OJ C 171, 22. 6. 1993, p. 4, paragraph 3. (7) The electric power consumption depends on the size and the form of the furnaces and varies between 6,3 kWh/kg (ESK plant in Delfzijl), 7,1 kWh/kg (Arendal), and 7,7 kWh/kg (Zaporozshje). See K.-H. Mehrwald: History and economic aspects of industrial SiC manufacture, reprint from Ceramic Forum International/Berichte der DKG, Vol. 69 (1992), No 3, p. 57. (8) K.-H. Mehrwald: History and economic aspects of industrial SiC manufacture, reprint from Ceramic Forum International/Berichte der DKG, 69 (1992), No 3, p. 54. The proportion of different crystal types in the SiC material depends significantly on the aluminium content. See also Ullman's Encyclopedia of Industrial Chemistry, 1993: Silicon Carbide, p. 750, 752. (9) According to the Commission's survey, SiC refractory grains have on average a SiC content of 96 %, whereas SiC abrasive grains have on average a SiC content of 98,4 %. (10) FEPA - Fédération Européenne des Fabricants de Produits Abrasifs: Standard for coated abrasive grains of fused aluminium oxide and silicon carbide, 1984, and: Standard for bonded abrasive grains of fused aluminium oxide and silicon carbide, 1984. (11) Case IV/M.702 - Starck/Wienerberger, OJ C 102, 4. 4. 1996, p. 18, paragraph 13. Confirmed in Case IV/M.811 - Creditanstalt-Bankverein/Treibacher, OJ C 8, 11. 1. 1997, p. 4. (12) OJ L 11, 14. 1. 1997, p. 30. (13) Council Regulation (EC) No 821/94 (OJ L 94, 13. 4. 1994, p. 21), imposed a definitive anti-dumping duty on imports of silicon carbide, originating in the People's Republic of China, Poland, the Russian Federation and Ukraine. This Regulation defines the product concerned ('product under consideration`) as SiC of both crystalline and metallurgical grade. This conclusion is based on the basic physical characteristics of SiC, but it was explicitly recognized that SiC was produced in different qualities for different applications in a joint production process. (14) Page 35 of the Notification. (15) Page 37 of the Notification. (16) Pages 37 and 55 of the Notification. (17) This figure includes only purchases of SiC that was produced in or delivered into the EEA. Only a few of the EEA abrasive manufacturers belong to a group that also operates abrasive manufacturing plants in other parts of the world, i.e. 3M, Tyrolit. (18) See the Specification Manual of Norton, General information on conventional abrasives, Annex 12 to the notification, document D.27, p. 85. See also Norton Catalog 400, Annex 12 to the notification, p. 10. William W. Wellborn: The expanding role of synthetic minerals in industry, Industrial Minerals, April 1991, p. 53. (19) See response of 3M (UK). (20) See Bruce McMichael: Abrasive minerals. Taking the rough with the smooth. Industrial Minerals, February 1990, p. 26. (21) According to the Commission's survey a sizeable minority (30,2 %) of the abrasive manufacturers who, at present, use green SiC could manufacture their final products without green SiC and instead replace it by black SiC. However, 65,1 % stated that they could scarcely switch and 69,8 % stated that they would not replace green SiC by black SiC even if the price for green SiC were to increase by 5 to 10 %. (22) See the Specification Manual of Norton, General information on conventional abrasives, Annex 12 to the Notification, document D.27, p. 85. (23) See the Specification Manual of Norton, General information on conventional abrasives, Annex 12 to the Notification, document D.27, p. 85. See also Norton Catalog 400, Annex 12 to the notification, p. 10. William W. Wellborn: The expanding role of synthetic minerals in industry, Industrial Minerals, April 1991, p. 53. (24) E. H. Peter Wacht: Feuerfest-Siliciumcarbid, Wien 1977, p. 7. Reaction starts at about 800 °C. See also Saint-Gobain/Norton Industrial Ceramics Corporation (Annex 12 to the Notification): Study on SiC Abrasive Grain Opportunities, 1994, p. 3. (25) William W. Wellborn: The expanding role of synthetic minerals in industry, Industrial Minerals, April 1991, p. 53. (26) See the Specification Manual of Norton, Conventional abrasives, cutting-off, Annex 12 to the Notification, document D.27, p. 111. (27) See Chemical Analysis of Silicon Carbide, FEPA-Standard 45-1986, R 1993. (28) See Chemical Analysis of Fused Aluminium Oxide, FEPA-Standard 46-1986, R 1993. (29) According to Tyrolit, the adaptation and testing of a bonding-system to a new abrasive mineral could last up to one year. Another abrasives manufacturer has indicated that the replacement of SiC in all his major product lines would take up to two years at least. (30) Page 7 of the Parties' Response. (31) See Case IV/M.54 - Aerospatiale/Alenia/De Havilland, OJ L 334, 5. 12. 1991, p. 42; Case IV/M.214 - Du Pont/ICI, OJ L 7, 13. 1. 1993, p. 13; Case IV/M.190 - Nestlé/Perrier, OJ L 356, 5. 12. 1992, p. 1. (32) For the importance of switching costs with regard to the product market definition see Case IV/M.603 - Crown Cork & Seal/Carnaud Metalbox (OJ L 75, 23. 3. 1996, p. 38, paragraph 19). See also Case IV/M.214 - Du Pont/ICI (OJ L 7, 13. 1. 1993, p. 13, paragraphs 43 and 44). (33) The broad range of investments necessary is attributable to the different numbers of SiC production lines that these companies have. (34) See Case IV/M.475 - Elf Atochem/Shell Chimie (OJ C 35, 11. 2. 1995, p. 4). (35) According to a comparison of total costs per piece associated with the grinding of ferrous-metal workpieces undertaken by GE Superabrasives, CBN is 30 % cheaper than aluminium oxide. See Annex 6 to the parties' letter of 11 July 1996. (36) This fact is also seen by the parties when they state in a different connection that the low level of investment in R& D in commodities such as corundum and SiC can be explained by the fact that it is unlikely that these commodities would regain the ground they have lost to more advanced products such as seeded gel aluminium oxide, CBN and synthetic diamonds if R& D spending were increased. See page 72 of the Notification. (37) This has been confirmed by the study of Saint-Gobain/Norton Industrial Ceramics Corporation on SiC Abrasive Grain Opportunities (Annex 12 to the Notification), page 3, where it is stated: '. . . the introduction of CNC grinding equipment has converted customers to diamond wheels due to their negligible wear rate. SiC wheels, while less expensive, require continuous machine adjustments and increased operator attention due to continuous wheel wear and dimensional changes.` (38) In the study on SiC Abrasive Grain Opportunities (see previous footnote), page 3, it is stated: 'Unless a dramatic improvement in SiC product lifetime can be achieved through bond or abrasive development, it is unlikely that this particular market segment (toolroom grinding applications) can be reclaimed by SiC abrasives.` (39) See Bruce McMichael: Abrasive minerals. Taking the rough with the smooth. Industrial Minerals, February 1990, pp. 19, 31. (40) Case No IV/M.811 - Creditanstalt-Bankverein/Treibacher (OJ C 8, 11. 1. 1997, p. 4, paragraph 18). (41) See the Specification Manual of Norton, General information on conventional abrasives, Annex 12 to the notification, document D.27, p. 85. Bruce McMichael: Abrasive minerals. Taking the rough with the smooth. Industrial Minerals, February 1990, p. 29. (42) See Bruce McMichael: Abrasive minerals. Taking the rough with the smooth. Industrial Minerals, February 1990, pp. 19, 29. (43) Case IV/M.190 - Nestlé/Perrier (OJ L 356, 5. 12. 1992, p. 1, paragraph 9). (44) For the importance of price differences with respect to the product market definition see Case IV/M.603 - Crown Cork & Seal/Carnaud Metalbox (OJ L 75, 23. 3. 1996, p. 38, paragraph 15). (45) William W. Wellborn: The expanding role of synthetic minerals in industry, Industrial Minerals, April 1991, p. 59. (46) See Notification, p. 44. (47) These figures were arrived at by adding up the imports as shown in the market share tables for the respective applications. According to the parties' market-share table for the total SiC market, imports add up to [> 90 000] tonnes (ECU [> 40] million). (48) The Commission's investigation found that processed SiC for abrasive, refractory, and other industrial applications had, on average, a SiC content of 96,9 %. Only about 7,2 % of the volume and about 4,6 % of the value of processed SiC sold to industrial end-users in the EEA in 1995 had a SiC content of less than 94 %. Abrasive manufacturers may use SiC material with a SiC content of below 94 %, i.e., dust collector fines, as filler in their blends. For these reasons, the Commission considers only SiC with a minimum SiC content of 94 % to be crystallized SiC. (49) See Fédération Européenne des Fabricants de Produits Abrasifs (FEPA): Bonded Abrasive Grain Size Standard (F), 42-1984, R 1993 and Coated Abrasive Grain Size Standard (P), 43-1984, R 1993. The F-standard defines 26 different macro grit sizes (F 4 to F 220) and 11 different micro grit sizes (F 230 to F 1200). The P-standard defines 15 different macro grit sizes (P 12 to P 220) and 13 different micro grits (P 240 to P 2500). (50) See ISO-standard 8486: Bonded abrasives - Determination and designation of grain size distribution. (51) See ISO-standard 6344: Coated abrasives - Grain size analysis. (52) Page 71 of the Notification. (53) For consideration of punctual delivery and absolute reliability as factors in the delineation of the geographical market, see Case IV/M.603 - Crown Cork & Seal/Carnaud Metalbox (OJ L 75, 23. 3. 1996, p. 38, paragraph 43). (54) See Council Regulation (EC) No 821/94 (OJ L 94, 13. 4. 1994, p. 21). (55) Notification, page 50, see also page 62. (56) See responses of Kuhmichel, Washington Mills, Timcal, Smyris abrasivi. (57) The average price in the EEA was found to be more than twice as high as in Eastern Europe and about 80 % higher than in China. (58) Page 71 of the Notification. (59) Page 71 of the Notification. (60) Page 70 of the Notification. (61) Annex I to the Decision contains business secrets and, therefore, has not been attached to the published version. (62) Notification, Annex 39. (63) Notification, Annex 39. (64) This and the following figures are estimates by the parties. (65) See letter of the parties of 14 October 1996, Annex 9. (66) First, the Commission added up the sales figures of the parties and the other major suppliers Orkla-Exolon, Navarro, MWK, Timcal, Washington Mills, H. C. Starck and Frank & Schulte. As a second step, the Commission eliminated double-counting resulting from inter-supplier purchases. Finally the Commission added the import figures estimated by it as explained under Section B, taking into account the fact that total imports include sales of Timcal in the EEA. (67) Orkla-Exolon estimated the market volume for abrasive grains to be about 46 000 tonnes in 1995. According to Treibacher the market volume was about 45 000 tonnes (ECU 45 million). Navarro estimated the market value to be about ECU 44,6 million. (68) The Commission gives a range of the market shares since it could be argued that the market volume (market value), respectively total imports, were 7,2 % (4,6 %) higher as calculated on the basis of the customer and supplier inquiries (see footnote 47). (69) The two figures cannot be added up because certain parts of the equipment can be used in either way for the processing of FEPA-F and FEPA-P grains. (70) See Norton Catalog 400, introduction, p. 1. (71) Mitchell Market Report: Silicon Carbide, 3rd. edition, 1992, volume 1, p. 109. (72) Page 71 of the Notification. (73) See Response, Annex 30. (74) See Response, Annex 25. (75) See letter of the parties of 14 October 1996, Annex 13. (76) See letter of the parties of 24 October 1996, Annex 4a. (77) OJ L 211, 6. 9. 1995, p. 1. (78) First, the Commission added up the sales figures of the parties and the other major suppliers, Orkla-Exolon, Navarro, MWK, Timcal, Washington Mills, H. C. Starck and Frank & Schulte. As a second step, the Commission eliminated double-counting resulting from inter-supplier purchases. Finally the Commission added the import figures estimated by it as explained under Section B, taking into account the fact that total imports include sales of Timcal in the EEA. (79) Orkla-Exolon estimated the market volume for refractory grains to be about 55 000 tonnes in 1995. According to Treibacher the market volume was about 45 000 tonnes (ECU 45 million). Navarro estimated the market value also to be about ECU 45 million. (80) The Commission gives a range of the market shares since it could be argued that the market volume (market value), respectively total imports, were 7,2 % (4,6 %) higher as calculated on the basis of the customer and supplier inquiries (see footnote 47). (81) First, the Commission added up the sales figures of the parties and the other major suppliers, Orkla-Exolon, Navarro, MWK, Timcal, Washington Mills, H. C. Starck and Frank & Schulte. As a second step, the Commission eliminated double-counting resulting from inter-supplier purchases. Finally, the Commission added the import figures estimated by it as explained under Section B, taking into account the fact that total imports include sales of Timcal in the EEA. (82) Page 3 of the parties' letter of 22 July 1996. (83) Deleted business secret. The parties expect significant efficiencies and cost savings resulting from a restructuring and streamlining of the production process in the Delfzijl plant by integrating it into the European SiC operations of Saint-Gobain. (84) OJ L 186, 21. 7. 1994, p. 38, paragraph 71. (85) OJ L 56, 6. 3. 1996, p. 1.