1999/229/EC: Commission Decision of 18 November 1997 relating to proceedings under Council Regulation (EEC) No 4064/89 (Case No IV/M.913 - Siemens/Elektrowatt) (notified under document number C(1997) 3589) (Only the German text is authentic) (Text with EEA relevance)
31. 3. 1999 EN Official Journal of the European Communities L 88/1 II (Acts whose publication is not obligatory) COMMISSION COMMISSION DECISION of 18 November 1997 relating to proceedings under Council Regulation (EEC) No 4064/89 (Case No IV/M. 913 — Siemens/Elektrowatt) (notified under document number C(1997) 3589) (Only the German text is authentic) (Text with EEA relevance) (1999/229/EC) THE COMMUNITIES, COMMISSION OF THE EUROPEAN Having regard to the Treaty establishing the European Community, Having regard to the Agreement on the European Economic Area, and in particular Article 57 thereof, regard to Council Regulation Having (EEC) No 4064/89 of 21 December 1989 on the control of last concentrations amended by Regulation (EC) No 1310/97 (2), and in particular Article 8(2) thereof, undertakings (1), between as Having regard to the Commission’s decision of 28 July 1997 to initiate proceedings in this case, Having regard to the opinion of Committee on Concentrations (3), the Advisory Whereas: (1) On 24 June 1997 the Commission received, to Article 4 of Council Regulation pursuant (1) OJ L 395, 30. 12. 1989, p. 1; corrected version: OJ L 257, 21. 9. 1990, p. 13. (2) OJ L 180, 9. 7. 1997, p. 1. (3) OJ C 90, 31. 3. 1999. (EEC) No 4064/89 (the Merger Regulation), notification of a proposed merger, whereby intends within the Siemens AG (Siemens) meaning of Article 3(1)(b) of the Merger Regulation to acquire control of Elektrowatt AG (Elektrowatt) through the purchase of shares. (2) By letter dated 15 July 1997 the Commission informed the parties of its decision to suspend implementation of the notified merger under Articles 7(2) and 18(2) of the Merger Regulation until a final decision was issued. (3) After the examining notification, the the notified Commission has established that the Merger project falls within the scope of Regulation and gives rise to serious doubts about its compatibility with the common market and the functioning of the EEA Agreement. By the decision dated 28 July 1997, Commission under initiated Article 6(1)(c) of the Merger Regulation. proceedings therefore, (4) The Advisory Committee discussed the draft of the present decision on 24 October 1997. L 88/2 EN Official Journal of the European Communities 31. 3. 1999 I. THE PARTIES and automating distribution, (5) Siemens is active in many areas. Its operations are basically in the fields of energy production, transmission systems engineering, propulsion, circuit and installation engineering, public engineering, communications private communications systems, protective engineering, automotive traffic engineering, engineering, medical engineering, semi-conductors, passive construction components and pipes and tubes, electromechanical information technology and lighting technology. components, networks, (6) Elektrowatt is a Swiss holding company which, via subsidiaries in Switzerland and Germany, is in electricity generation and supply, active technology, building engineering, security installations and general building telephone operations, and property engineering services in various fields. management, the other suppliers. CSG currently owns 44,9 % of Elektrowatt; are widely dispersed. Before its shares are sold to Siemens, CSG will make the general-public shareholders a public offer for all Elektrowatt shares. shares the public offer (9) The merger is caught by Article 3(1)(b) of the Merger Regulation, since Siemens is acquiring sole control over Elektrowatt. This is still the case if to acquire further Elektrowatt shares through CSG is completely unsuccessful and Siemens can only purchase the 44,9 % of Elektrowatt already belonging to CSG. Ownership of these shares gave CSG, via a secure majority at the general meeting, de facto since attendance at the general meeting in the last four years was clearly less than 70 % on each occasion and the other shares are widely dispersed. of Elektrowatt, control sole (7) The activities of Elektrowatt which will be taken over by Siemens are: III. EU-WIDE SIGNIFICANCE — commercial building control (essentially through Landis & Gyr/Landis & Staefa), — security engineering (through Cerberus), — engineering and general operations for building and property management, — services, systems, installations and equipment for energy supply companies, — products, systems and services for telephone installations operators (particularly card- and coin-operated phone booths), and — visual security devices. Elektrowatt’s activities in the fields of electricity supply and (inter)connection will be sold to firms other than Siemens. (10) Together, Siemens and Elektrowatt have an aggregate worldwide turnover of more than ECU 5 billion (Siemens ECU 49,98 billion and Elektrowatt ECU 4,58 billion). Each of them has an aggregate EU-wide turnover of more than ECU 250 million (Siemens ECU 30,325 billion and Elektrowatt ECU 2,27 billion). Neither Siemens nor Elektrowatt achieves more than two thirds of its aggregate EU-wide turnover within one and the same Member State. The project therefore has EU-wide significance but does not constitute a case of cooperation under the EEA Agreement. IV. ASSESSMENT PURSUANT TO ARTICLE 2 OF THE MERGER REGULATION A. RELEVANT PRODUCT MARKETS II. MERGER (11) The operations of Siemens and Elektrowatt overlap and are divided by the parties into the following areas of activity: (8) Siemens intends to purchase the Elektrowatt shares held by the Cre´dit Suisse Group (CSG), electricity supply and Zurich. Elektrowatt’s split off (inter)connection activities will be subsidiary beforehand and transferred to its a Watt AG. They will be energy consortium of German and Swiss acquired by — commercial building control, — building security technology (fire alarms, security intrusion protection, and other systems), 31. 3. 1999 EN Official Journal of the European Communities L 88/3 — network control technology, — energy meters, energy management systems, ripple control transmitters and receivers, — payphones (coin- and card-operated telephones). is active on a significant scale. For all practical purposes, Siemens does not supply equipment and components outside its own building management systems. No further discussion is needed, therefore, of the markets for equipment and components for building management systems. (12) The procedure was initiated on account of possible competition problems in the fields of fire alarms, electricity and heat meters, ripple control and payphones. transmitters receivers, and 1. Commercial building control (13) By commercial building control includes therefore, is meant the measuring, control, regulation and management of heat, ventilation, air-conditioning and other technical installations, such as building systems, in commercial buildings. Commercial building control, and electronic data-processing systems and their components (excluding the heating, ventilation and air-conditioning equipment itself) which are economic and energy-efficient used for control the operational installations in commercial buildings, including the preparation and commissioning of such systems and showing building management operators how to use them. and regulation of electronic the (14) A distinction should be made between the for building management systems as and the markets such servicing the market such, components systems, and the market systems (4). equipment for needed for (hardware) for (a) Equipment and components for building management systems (15) Equipment and systems components building for management can be divided into different groups of appliances and components that are not interchangeable, for example cables, valves and valve mechanisms. These markets are upstream of for building management systems per se, since hardware is a primary product for the suppliers of such systems. In the for markets building management systems, only Elektrowatt for equipment and components that (b) Building management systems and buildings, commercial ventilation in (16) The market for building management systems as such covers the development and manufacture of systems for the control and regulation of air-conditioning heating, (HVAC) their commissioning and showing operators how to use them. Building management systems are developed and supplied on a customised basis in the light of the particular requirements of each case. and commissioning are carried out either by the product its manufacturer through wholesalers subsidiaries/branches, or and undertakings in the HVAC sector. The following client segments can be differentiated: and office buildings, hospitals, universities schools, In purely residential buildings, however, complex building management systems are not normally used. specialised industries and hotels. customers Supply itself final or to (c) Servicing of building management systems (17) Downstream of for the market debugging System of the manufacturers building management systems is the market for servicing such systems. This covers the maintenance, repair, replacement, modernisation, operational building’s control and installations. or companies working for them supply servicing for their own’ building management systems, especially as part of the guarantee for newly Other people’s’ building installed systems. also serviced by management competitors, conclude contracts with suppliers for all these services. The market for servicing building management systems therefore covers all the said services. systems are however. Customers 2. Building security technology (4) See the Commission Decision of 12 February 1996 in Case No IV/M. 692 — Elektrowatt/Landis & Gyr (OJ C 69, 7. 3. 1996, p. 3). The delineation of the market made in that Decision was confirmed to the greatest possible extent in the course of the investigations in this case both by the parties and by their competitors. (18) Building security technology covers fire alarm alarm) intrusion and security systems, access systems. technology installations are used primarily in office and industrial buildings, hospitals and hotels. In this (burglar protection control and other security Building L 88/4 EN Official Journal of the European Communities 31. 3. 1999 field, too, a distinction must be made between the market for equipment and components, the market for systems and installations as such, and the market for servicing. (a) Equipment and components for building security technology for security building (19) Only Elektrowatt is significantly active on the markets technology equipment and components. Siemens basically manufactures such equipment and components only for its own use (it also sells to third parties, but on a small scale and only in Germany). The and shares aggregate market Elektrowatt/Cerberus in Germany are less than 15 %, however. In the other Member States and throughout the EEA, Elektrowatt’s market shares for equipment and components are less than 25 %; market share aggregation does not apply. No further discussion is needed therfore of the markets for equipment and components for building security systems. Siemens of (b) Building security fire protection installations, intrusion protection and other building security insallations installations: (20) The to for market separate building each customer, security installations/systems as such covers modification in accordance with the specific of the plant requirements of fitting and commissioning, and showing operators how to use the installations/systems. The Commission has ascertained that fire alarm installations form a intrusion product market protection and other systems. Such installations serve different purposes in each case and are not interchangeable from the customers’ point of to other building security view. installations, fire protection installations are frequently required by law and/or insurance companies. The sensors they use (ionisation, optical, thermal) are different to those in, say, intrusion (sound, radar). There are also ultrasound, require customers who only, or primarily, straightforward fire protection systems, for commercial example establishments. protection infrared, installations In contrast hospitals small or (21) There is admittedly a tendency for fire alarm systems to be integrated with other building relatively security installations. large etc. firms generally require intrusion protection and access In particular, government offices, and together systems must work fire protection, and the control as well as different as smoothly as possible. To achieve this, however, it does not seem necessary for fire alarm and other safety installations to be purchased from the same source, since (part) installations from different manufacturers can be used together. some Customer preferences are not customers prefer security technology from the same manufacturer, while others attach importance to buying from several suppliers. In any event, large suppliers are able to deliver fire protection, intrusion protection and other building security installations. Despite the separate product markets for fire protection installations on the one hand and for intrusion protection and other security installations on the other should be assumed. to buy all integration, tendency towards clear: their (c) Servicing building security installations repair, maintenance maintenance, (22) It could not be clearly established whether the servicing of fire alarm installations and intrusion protection and other security systems forms an independent product market or is to be classed with the systems market. Servicing includes the replacement, modernisation, performance monitoring and debugging of the security installations. Often, the security of installations is carried out by the manufacturer. The customer often prefers since the reliable, bug-free operation of the installation and the fastest possible debugging are extremely relevant for security. However, there are also other out maintenance services. The question whether the servicing of building security installations forms an independent market does not have to be decided, however, since even if a separate market is assumed there are no problems of competition. firms which (smaller) building carry this, 3. Energy meters, ripple control technology, energy-management systems, network control technology (command and control equipment for energy suppliers) (23) Command and control equipment for power supply companies covers equipment, systems and installations which are used (a) to monitor and control power and other energy networks (network control systems) and (b) to record and control energy consumption. The command and control equipment in the second product group all uses number recording technology, but can 31. 3. 1999 EN Official Journal of the European Communities L 88/5 be further divided according to its different applications. (24) Energy meters are mechanical and electronic meters and metering systems which record the quantities of electricity, gas or heat consumed. As explained by the parties, electricity, gas and heat meters form independent relevant product markets, since both the technology used and the customer categories differ. The customers for energy meters energy suppliers, i. e. electricity, gas and district heating companies. respective are the (a) Gas meters (25) The market for gas meters is not affected by the merger, since only Siemens with a market share of 22 % in the United Kingdom is active in this sector and Elektrowatt does not manufacture gas meters. (b) Electricity meters (26) The market for for in the high-voltage electricity meters on covers mechanical meters the (built Ferraris ( hybrid electromechanical meters principle), meters’) and electronic meters. A distinction can be drawn, on the basis of the application, between meters for tariff customers (households industrial and small consumers), meters customers and high-end’ meters. The high-end domain comprises fields of application with special, particularly high technical requirements for measuring the exchange of (e. g. meters grid between current different electricity producers). In the case of households and small consumers, which use only low-voltage electricity and are subject to at the most two tariffs, it is mostly mechanical meters that are still used, at any rate in western and central Europe with the exception of France, the Netherlands In Scandinavia, by contrast, it is electronic meters and in which are primarily being used, households final consumers, electronic meters primarily are being used throughout In the high-end the EEA. category, only electronic meters are used. and the United Kingdom. too. Among industrial (27) Meters with electronic measuring systems and counting mechanisms are in competition in a electronic meters have spectrum than mechanical facilitated by electronic meters, terms of price and function with traditonal equipment built on the Ferraris principle. Because greater functional range, they can be used in a broader or applications electromechanical meters. Thus the technical implementation of tariff schedules, for example the introduction of complex customer charging, which is is highlighted as a substantial advantage by the majority of customers surveyed. Compared with mechanical ones, moreover, electronic meters are more sensitive. Their operability is less affected or by temperature. Further advantages of electronic over mechanical meters are a lack of sensitivity dimensions to their (space-saving multifunctional equipment), installation possibilities (e. g. combination meters with ripple control receivers or timer) and the use of cost-saving reading techniques (remote reading). Among the disadvantages, however, can be reckoned shorter calibration periods, a higher breakdown rate and a currently higher purchase price than the mechanical alternating current or three-phase meter built on the Ferraris principle. environment, fluctuations frequency voltage, smaller in of with alternating application, however, even taking account of (28) A narrower definition of the market on the basis is of fields inappropriate, the differences between mechanical and electronic meters. Even though in the domestic field it is principally Ferraris meters which continue to be used, at any rate in central Europe, the generally expected diversification of tariffs will accelerate the spread of electronic meters, which have in any case been manufactured for two decades. The higher cost at present of electronic meters compared or three-phase meters is not an obstacle to their increasing use, even in households. Their use may even prove to be more economic on a total cost basis, installation and administrative outlay compared with mechanical meters is taken into account. A further argument for the increased use of electronic as opposed to mechanical meters is that their prices generally have fallen in the past five years as a result of constant improvement and greater competition from new suppliers. The customer expectation is that this trend will continue. The Commission uniform market covering all types of electricity meter, from the traditional Ferraris via the hybrid to the electronic. therefore technical assumes current lower the if a L 88/6 EN Official Journal of the European Communities 31. 3. 1999 (c) Heat meters (29) Heat meters are appliances which measure and indicate the consumption of thermal energy in flats and houses and in industrial and municipal is buildings. The either equipment mechanical electronic ultrasound). Mechanical (measurement meters are being increasingly replaced in all spheres by electronic ones. The Commission is therefore assuming a uniform market covering mechanical and electronic heat meters. used (vane mechanism) or by (d) Energy management systems (30) Energy management systems are installations for recording, controlling and monitoring electricity consumption. The customers for such systems are principally power supply companies and firms, which use relatively large optimise energy management to consumption. The aim, for instance, is to try and exploit cheap-rate periods and avoid or flatten consumption peaks. industrial systems (e) Ripple control transmitters and receivers can be (31) With the aid of ripple control transmitters and receivers, multi-tariff meters and consumption equipment centrally controlled and switched on and off. The transmission device of the ripple control unit is installed at the power supply company and the receivers at the site of consumption the multi-tariff meters are equipment. Ripple in increasingly the metering current-consuming systems devices. The control transmitters and receivers are chiefly power supply companies. incorporated installed in the or transmitters customers control ripple for (f) Network control technology (32) By network control Such installations technology is meant the development, engineering, delivery/installation, maintenance and servicing of control systems for public power, gas, water and district heating networks. of computerised central control stations (network control stations) and facilities with which the geographically separate parts of a network, for example transformer substations, switchgear and power remotely controlled (remote control or station control technology). Network control technology does not include can be stations consist controlled by network control equipment, in the power supply field such as systems, switching protection equipment and transformers. The customers for essentially technology network control power supply companies. installations, overload are (33) Network control technology installations must be tailored to the specific requirements of individual customers, whose networks have usually developed over time and also differ from each other in terms of commercial organisation. there is no justification for Nevertheless, relevant dividing into separate sector the product markets according to the type of network to be controlled, since the basic control technology for network control installations does not differ. In view of the complexity and size of the equipment, the design, installation and maintenance are carried out by one supplier. According to the Commission’s investigations, in the network there are no smaller control technology field which simply carry out the maintenance of network control technology installations. The Commission is therefore assuming an overall market for network control technology for public and industrial power, gas, water and district heating networks, which comprises and design, maintenance of the installations. installation firms the 4. Payphones (34) Payphones of services types of by mode payment. There publicly terminal telecommunications accessible are telecommunications equipment, through which the general public is supplied with for consideration. Payphones can be distinguished firstly are coin-operated phones, phones using prepaid phone cards and credit-card telephones. There are also combined telephones, for example combined coin and card phones, or phones card. This which take different circumstance does not mean, however, that separate markets could be formed depending on the mode of payment. All manufacturers supply phones for the important payment modes (coin, phonecard and credit-card phones). Customers, too, usually ask for telephones with several or all of the abovementioned payment modes. Thus the conditions of competition for payphones with different modes of payment do not differ. It is to be expected, moreover, that payphones with different modes of payment will continue to be demanded (thus, for instance, phonecard telephones and credit-card telephones sometimes appeal to different end users; even coin-operated telephones will not disappear entirely). 31. 3. 1999 EN Official Journal of the European Communities L 88/7 and private’ (outdoors) payphones. (35) A distinction must be made, however, between public’ Public’ payphones are telephone installations, operated by telecoms companies that are still State-owned or by private operators of the public telephone network authorised to do so as a result of liberalisation, which are principally located in public, unsupervised places and mostly accessible round the clock. Private’ payphones are terminal equipment operated both by the telephone companies and by private undertakings, with independently set rates often higher than those of public’ payphones; they are usually located on private property indoors and are often accessible only during certain times. Even after liberalisation of complete it will be necessary to telecommunications, maintain a installations network consisting of public’ payphones as part of the basic Private’ payphones will, by definition, be used for profit and are therefore suited to ensuring a nationwide basic not telephone the population. The therefore assuming different Commission is product markets public’ and private’ payphones. telephone supply. supply the for for (36) A further lies fundamental difference between public’ and private’ payphones in the additional security measures that are needed for Public’ payphones must public’ payphones. also clearly be more robust than payphones installed indoors, for example in restaurants, airports and government buildings, where there is less danger of vandalism. The manufacturing costs of unsupervised public’ payphones are therefore clearly higher than those for private’ payphones (two or three times as high). The therefore assuming different Commission is product markets public’ and private’ payphones. for (a) Public payphones (37) are companies Public’ payphones are to be found in the public domain, principally on streets and in public places. Telecoms frequently subject, even when they are already privatised, to State regulations, which oblige them to provide a basic supply of payphones in the extra public domain. security the manufacturing costs of unsupervised public’ payphones are clearly higher than those of private’ ones. Also, the operation of public’ payphones is often not very profitable on account of higher costs and declining demand (inter alia, owing to the growing spread of mobile phones). In this field there are only a few In addition, because required, measures are large customers, who (may) take their decisions not just on the basis of market criteria. The public’ payphones market is essentially for determined customers, whose these by procurement policy and purchasing decisions have a decisive influence on market share. (b) Private payphones (38) The market for private’ payphones is completely different in competitive structure to that for public’ payphones. Private’ payphones are operated on private property by a wide variety of firms. For instance, private’ payphone operators may be owners of restaurants, pubs or hotels. There could also be private’ payphone for networks stations. example, in, Operators of private’ payphones are free to decide whether they want to operate payphones or not and will do so only if they expect a direct or indirect profit from them. service B. RELEVANT GEOGRAPHIC MARKETS 1. Commercial building control (a) Building management systems (39) According to the undertakings involved, the market for commercial building control covers the entire EEA. They reason that barriers to market entry are low and that products and services are basically the same throughout the EEA. Any differentiation is basically order, not country, specific. Differences might also arise as a result of climatic conditions. The statutory and administrative provisions in the individual Member States, however, are not so different as to affect In addition, the Europe-wide European Committee for Standardisation (CEN) will shortly come into force in this field. trade. standards drawn up by cross-border (40) In its decision in Elektrowatt/Landis & Gyr (5), the Commission mentioned a few other reasons for accepting national markets, without however conclusively defining the geographic market. The Commission’s more recent enquiries have essentially confirmed the parties’ submission. (5) See footnote 4. L 88/8 EN Official Journal of the European Communities 31. 3. 1999 With the introduction of CE standards, which also cover product documentation and service manuals, the regulatory differences between the Member States will become increasingly smaller. Global manufacturers point out in this respect that progressive standardisation is leading to different product designs in the United States and the EEA. The Commission is therefore assuming national markets for servicing. 2. Building security technology (41) Moreover, in be assumed to the local presence/proximity customer advantageous, to continues particularly as far as maintenance is concerned. This is why internationally active suppliers have a combination of central production plants and national sales organisations. Differences in the distribution of market share between Member can therefore be put down to the States historical presence of a number of nationally established suppliers. However, this does not argue against accepting an EEA-wide market. the development and There is demand for installation of complex building management systems throughout the EEA. Severe restrictions of a technical or a legal nature do not exist. As already abovementioned decision, any price differences are also not that significant, because the services (installation of the equipment, maintenance work) are carried out on site and prices are therefore strongly influenced by nationally different labour costs. climate Geographical conditions in southern Member States, do not warrant a narrower definition of the market. The building management systems of the large suppliers are adapted to different conditions. In the same way as the operational requirements for each project, which differ markedly from each other, climate-related requirements affect only the final configuration of the overall system and not its basic functions. For these reasons, the Commission is an EEA-wide market for building management systems. pecularities, assuming least such the as at (b) Servicing building management systems (42) As already mentioned, the local presence of the supplier is advantageous as far as servicing is concerned, since, in the event of a malfunction, customers require a response in not more than half a day and are generally not satisfied with telephone. Building the advice management systems are principally serviced, therefore, by nationally active, often relatively small undertakings, which are not associated system manufacturers. with the international given over security products technology. They reason that supplied (43) The parties designate the entire area of the EEA as the relevant geographic market for building the security building and demanded are basically the same and that any differences are not country, but order, specific. In some fields, however, different forms for the equipment the required differences in national provisions. Furthermore, in this field, there is already one European standard in force, and an additional one is lead to further expected shortly, which will harmonisation. because are of the existence of national markets. (44) The Commission’s enquiries have confirmed that there is a trend towards Europeanisation in this area also. There is, however, still strong evidence of In particular, many European countries have their own approval and recognition systems in the security technology field, which means that in each country a separate test and recognition procedure has to be initiated. (a) Fire alarms additional Belgium especially, (45) There is a European standard (EN 54) for fire alarms, but it can be regarded only as a lowest common denominator’ and as a rule does not suffice on its own to secure recognition in a Member State as a supplier. In Germany, France and local requirements have to be met. In Germany, for the VDS approval/recognition by example, (Verband der Sachversicherer) is necessary. In Italy, the United Kingdom, France, Austria, Spain installation Scandinavia standards exist. Fire alarm systems must fit into the local fire brigade infrastructure; in Ireland and Greece, for example, the local fire brigade must be involved at the planning stage. The Commission is the markets for fire alarm systems are still national. therefore assuming that local and 31. 3. 1999 EN Official Journal of the European Communities L 88/9 (b) Intrusion protection and other building security installations (46) Intrusion protection and other building security installations must bear the CE mark throughout Europe. The hardware as such can then be traded across Europe. The actual use of such still governed in the hardware is, however, individual countries as a rule by additional requirements. National authorisations, either by authorities or by insurance associations, exist in Belgium, Germany, Spain, France, Ireland, the In Netherlands Belgium, Ireland, transmission equipment still has to be approved by the respective telecoms company. Intrusion protection systems must, moreover, fit into the national police infrastructure. The Commission has therefore come to the conclusion that the markets intrusion protection and other building security installations are likewise still national. and the United Kingdom. France, Greece and for (c) Servicing of fire alarm, intrusion protection and other building security installations (47) As with equipment markets, the markets for the servicing of building security installations are also national. Even more so than in the case of the geographical proximity to the customer plays an important part in the case of servicing. Such proximity is especially necessary when faults have to be put right quickly. equipment market itself, 3. Energy meters, ripple control technology,energy management systems, network control technology (command and control equipment for energy suppliers) (a) Electricity meters (48) The parties maintain that for the EEA is geographic market the relevant electricity meters, for the following reasons. Whereas up until about 10 years ago the markets for electricity meters were still separate national markets with predominantly national production and a company like Landis & Gyr could do business throughout Europe only by maintaining its own manufacturing plants in 10 European countries, now changed fundamentally. Customers no longer attach any importance to the presence of a manufacturer in conditions have their country, but demand quality, service, short delivery periods, a high degree of functionality and greater economy, that is say an altogether more favourable price/performance ratio. This is leading to a levelling of market prices in Europe and to a concentration of production among suppliers. Market entry costs have, at all events, case of fallen considerably in the electronic meters. National authorisation or standardisation provisions do not constitute significant market entry barriers as they do not affect the fundamentals of the development and construction of energy meters. is strong already (49) The Commission’s enquiries have revealed that there trend towards a Europeanisation in respect of electricity meters. Besides the parties there are a number of other suppliers who are active throughout Europe or at least in several Member States. The successful placing on the market of Iskra Emeco, a company from Slovenia, shows that the market for electricity meters is becoming increasingly international. What is more, customers are obliged, at least in the case of large procurement to tender on a Europe-wide basis contracts, pursuant to the Utilities Directive. for their tenders suppliers (50) Although the larger electricity supply companies electricity meter invite requirements on a Europe-wide basis, the contract will still be performed at national level. Nearly all therefore have in each Member State an establishment or at least a local sales agency, or else they market their products sales organisation of another manufacturer who has a presence in the Member State concerned. Although they did not regard national representation as a decisive factor in their choice of a particular supplier, the customers surveyed stated that they considered it at least highly advantageous when it came to working together, especially over the timely delivery of spare parts. through the presence such the of a (51) As far as the technical standards governing electricity meters are concerned, a distinction has to be made. There are European standards for electricity meters, such as, for example, EN 60521 for mechanical alternating current and active-power meters of categories 0,5, 1 and 2, EN 61036 for electronic alternating current and active-power meters (precision categories 1 and 2), EN 60687 for electronic alternating (precision current categories 0,2 and 0,5) and EN 601268 for electronic alternating current and reactive energy meters (precision categories 2 and 3). In some Member States (e. g. Germany, Austria and the and active-power meters L 88/10 EN Official Journal of the European Communities 31. 3. 1999 United Kingdom), these are coupled with a national standard (e. g. DIN EN provisions, BS EN provisions). There national provisions on meters, for example concerning the particulars which may be noted down when meter readings are made or transcribed. also are are (52) In most Member States, with the exception of Denmark, Finland and Luxembourg, electricity meters must be approved. In Denmark, national approval provisions for electricity meters are scheduled to enter into force in August 1998. The approval conditions are laid down in the In some cases respective national provisions. there approval provisions (e. g. Germany, the Netherlands and Austria). Calibration and the fixing of tolerances for the electricity meters, which guarantee accuracy of the meter reading and hence serve to protect the final consumer, are also the subject-matter of national rules. Calibration and for recalibration electricity meters from one Member State to another. and therefore differ type-specific tolerances detailed, periods the technical provisions calibration delimitation. Whether, requirements, for (53) The need to have a branch at national level, the special special statutory and tolerances, and the national approval procedures are so many reasons for a narrower, national market that exercised through Europe-wide demand is tenders, for justifying the acceptance of meter markets which are currently still national in character can remain an open question, since the proposed merger does not result, either in the EEA or in the individual Member States, in the creation or strengthening of a dominant position. they are sufficient given (b) Heat meters and tolerances, special national statutory and technical provisions (54) The legal and factual framework for heat meters corresponds to that for electricity meters. There requirements, are governing special calibration national approval procedures. Customers, at least in the case of relatively large procurement procedures, are obliged to tender on a Europe-wide basis in accordance with the Utilities Directive. Furthermore, as well as the parties, there are a suppliers, who are active number of other throughout Europe or at any rate in several Member can remain undecided, however, whether the markets for heat meters are currently still national or whether there is States. It already an EEA market, since the proposed merger does not result, either in the EEA or in the individual Member States, in the creation or strengthening of a dominant position. (c) Ripple control transmitters and receivers (55) Ripple control are ripple transmitters and receivers are used in most Member States. The Commission’s enquiries have established that the requirements and control governing receivers throughout the Europe. There are no market entry barriers due to country-specific technical requirements or national approval provisions. The Commission therefore assumes least an EEA-wide market for ripple control transmitters and receivers. transmitters same there is at largely that (d) Energy management systems the governing requirements throughout Europe. (56) The Commission’s enquiries have established energy that systems are to a large extent management similar Such different requirements as do exist are mostly company, and not country, specific. There are no market entry barriers due to country-specific technical therefore requirements. The Commission is for assuming at energy management systems. least an EEA-wide market (e) Network control technology (57) The for that the network parties maintain relevant control geographic market technology is the EEA, and for the following reasons. Intermediary trade within the EEA is not hindered by import restrictions and low transport costs make it financially worthwhile to from a central manufacturing supply goods plant. This can be seen from the organisation and marketing policy of the major suppliers. Network control technology is characterised by a uniform industry standard resulting from the universally used electronic data-processing and data-systems technology. The remaining national approval requirements or standards affect the bases neither of the development nor of the construction of network control systems, and all suppliers are able to meet national specificities. The deregulation and liberalisation of the energy markets is exerting additional price pressure on the purchasers of network control technology, 31. 3. 1999 EN Official Journal of the European Communities L 88/11 and this spells the end of national procurement preferences. Lastly, the Commission has already recognised, in its Decision of 3 September 1996 in Case No IV/M. 706 — GEC Alsthom NV/AEG (6), a comparable effect of deregulation in the market for network control components of power generation plants. still they exist, control network (58) The Commission’s enquiries have confirmed the parties’ standpoint. The technical standards of network control technology are largely identical. country-specific Where requirements no longer play any decisive role. The procurement policy of power supply companies is based on Europe-wide calls for tenders which encompass the planning, design, building and commissioning of complete or partial The determining factors when it comes to deciding what to buy are price, specifications and the quality services. Company-specific requirements may, however, lead to a preference for one manufacturer, especially in the event of the extension or replacement of existing systems. This may help explain the different market in the individual Member States. Both the customers and the suppliers surveyed share the parties’ point of view. The Commission accordingly assumes there is at least an EEA-wide market for network control technology. products systems. shares and the of 4. Payphones and technology. The (59) The notifying parties consider the geographic market for payphones to be at least EEA-wide. The reason they give is the largely identical technology for payphones worldwide. Differing national access conditions or standards do not constitute barriers to market entry since they do not affect the bases of payphone development, construction leading suppliers of payphones can produce equipment which satisfies national approval criteria and customer requirements. Differing market share levels in different European countries can be explained purchasing behaviour of the mostly State-owned monopoly the telecommunictions increasing liberalisation of telecommunications this markets, significant, is becoming inasmuch as growing competitive however, pressure will lead to a more cost-conscious purchasing behaviour on the part of telecoms operators. operators. With historically less the by (6) OJ C 308, 17. 10. 1996, p. 4. (a) Public payphones specifications made (60) In the past, markets for public’ payphones were national. Public’ payphones were operated by authorities. National State-owned telephone product for it difficult public’ payphones to supply in suppliers of other Member States. Orders were always given to a small group of domestic suppliers, which is why such suppliers usually have high market shares in their countries. Foreign suppliers could supply non-domestic markets only through national those markets. This procurement policy promoted the emergence network specifications and technical standards, which are still in existence today. subsidiaries established payphone different of in (61) In almost all the Member States the public’ payphones field has not yet been liberalised (exceptions: Finland, Sweden and the United Kingdom). In every country, even those in which the the sector has already been liberalised, respective State-owned) (still or previously telecoms company exerts a strong influence. These telecoms companies operate all or (in liberalised markets) most public’ payphones and are therefore able to demand for their payphone networks specifications and technical standards which payphone suppliers have to fulfil. These specifications and technical standards, and in particular the security philosophy’, differ so markedly from one country to another that a separate payphone model has to be developed for each major Member State. (62) The question whether national markets must be assumed, as before, for public’ payphones can be left open at this point. The merger of Siemens and Elektrowatt has appreciable competition effects public’ payphones in Germany. It is sufficient, therefore, to examine whether Germany should be regarded as a separate relevant geographic market. the market only for on (63) The most important structural features of the public’ payphones sector in Germany are: — that Deutsche Telekom has in the past public’ exclusively from undertakings procured, and is today procuring, payphones established in Germany, L 88/12 EN Official Journal of the European Communities 31. 3. 1999 — that changes for contract the development in this behaviour over the forecast period are not to be expected, since the and manufacture of the new cardphone system, which will replace the current generation of card phones, has already been given by Deutsche Telekom to domestic suppliers, Siemens and Landis & Gyr, there is — that there was no Europe-wide tender for the award of this contract in 1992 and that, in Germany no genuine hence, Community in the competition as public’ payphones sector; nor, given that the contract and manufacture of the new cardphone system has been awarded to Siemens and Landis & Gyr, will there be a Europe-wide tender for the procurement of public’ payphones during the forecast period. development the yet for (64) In view of the current structural features of the the public’ payphones regarded as a German market separate relevant geographic market the purpose of whether the merger could create a dominant position which would significantly impede effective competition. sector should be in Germany, for (b) Private payphones is still also course, conditions increasing. sector has, of (65) In the private’ payphones sector, market and competitive differ considerably from one Member State to another, for example in relation to payphone density. This already been liberalised in all Member States except Italy. Here, too, the (still or previously) State-owned telecoms companies continue to control a large part of the market, but competition from private suppliers payphone networks also need security measures and a control station linking the network, together with appropriate software. The private’ supplier is free here, however, to choose his standards and software. A multinational private’ supplier can therefore, for example, operate in different countries with the same systems. All that then has to be installed is an interface with the respective The Commission is therefore assuming there is at least private’ payphones. an EEA-wide market communications network. Private’ for C. ASSESSMENT 1. Commercial building control (a) Building control systems (66) Both Siemens and Elektrowatt are active in the market for building control systems. According to the parties’ estimates, the market in the EEA may be put at some ECU 1,6 billion. The merger will result in an aggregate market share of [30 % to 40 %] (*) (Elektrowatt through Landis & Staefa [25 % to 35 %], Siemens [0 % to 10 %]). the volume of (67) Besides the parties, Honeywell Inc. , USA (Honeywell) and Johnson Controls Inc. , USA (Johnson) are leading suppliers of building control systems. Honeywell and Johnson are regarded as the world market leaders. In the EEA, Honeywell and Johnson have market shares of approximately [10 % to 20 %] and [5 % to 15 %] respectively. Other significant competitors are TA Control and Danfoss, which operate chiefly in the Scandinavian countries where, according to the Commission’s estimates, they have market shares of up to 20 %. In the active remainder competitors who often focus clearly on one or in which they achieve two Member States from 5 % to 15 %. This market shares of category includes in the United Satchwell in Kingdom and France, Kieback & Peter Germany, Sauter (7) in Germany and France, and Priva in the Netherlands. the EEA there are of (68) The as, such example, commercial control market building overlaps with a number of neighbouring, markets heating, for ventilation and air-conditioning installations, computer and software technology, electrical process installation control security and technology. Companies which are active in these areas are potential competitors, and some of commercial them have already entered the building control market. industrial building technology, technology (69) In view of the existence of a number of competitors, including several financially strong (*) Parts of this text have been edited to ensure that confidential information is not disclosed. (7) Elektrowatt holds 36 % of the shares in Sauter, but does not have any voting rights. In paragraph 35 of Decision IV/M. 692 — Elektrowatt/Landis & Gyr (see footnote 4), it was established that Elektrowatt could not influence the conduct of Sauter. 31. 3. 1999 EN Official Journal of the European Communities L 88/13 companies which are world market leaders, and having regard to further potential market entries from neighbouring sectors, to be expected that Siemens and Elektrowatt will occupy a dominant position in the market for building control the merger. systems as a result of is not it newcomers have entered the market, including the American firms Tyco and Notifier, the latter being a particularly aggressive competitor. The position in the relevant national markets may be assessed as follows: (b) Servicing — G e r m a n y the system. There (70) The same holds true for the market for the servicing of building control systems. Servicing is often carried out by the company which supplied/installed are, however, a number of, mainly small, regionally active, companies which specialise in servicing. Of the parties, only Elektrowatt/Landis & Staefa is active to any extent in the servicing field (EEA market share [10 % to 20 %]). Siemens carries out and Belgium/Luxembourg, where its market shares are and [0 % to 10 %] respectively. [0 % to 10 %] in Germany servicing only 2. Building security technology (a) Fire alarms (71) The Community-wide market volume for fire alarms is, according to the notifying parties, approximately ECU 1,8 billion. The largest national market is Germany (market volume approximately ECU 550 to 600 million), followed by France (approximately ECU 300 million) Kingdom (approximately ECU 250 to 300 million). There will be significant increases in market shares in this area only in Germany and Denmark. United and the In these countries, (72) Although Siemens has market shares of more than 30 % in Luxembourg, the Netherlands and is not active in those Austria, Elektrowatt countries. Equally, Elektrowatt has market shares of more than 30 % in Finland, France, Portugal and Sweden, where Siemens is not there will be no active. increase in market shares. There is no likelihood the mere disappearance of a potential that competitor will lead to the creation of a dominant position. Nor is there any evidence to that Siemens or Elektrowatt already suggest occupies a dominant position in one of these countries. In each of these markets there are a number of competitors with market shares in to time excess of 10 %, and from time is share (73) Siemens has a market share for fire alarms in Germany of approximately [35 % to 50 %] and is hence the market leader. Elektrowatt/Cerberus is hardly represented in this field in Germany (its market [< 5 %]). The main competitors are Bosch (market share, according to the Commission’s estimate, approximately [15 % to 25 %]), Caradon Esser (market share, according estimate, approximately [15 % to 25 %]) and Hekatron (owned by Schweizer Securiton AG) (according to the Commission’s estimate, approximately [10 % to 20 %]). There are also a number of suppliers with market shares of up to 10 % (including Fritz Fuss and Tyco). the Commission’s to least (74) In view of the minimal increase in market shares and the presence of at three strong competitors, the merger is unlikely to lead to the creation or strengthening of an (individual) dominant position on the part of Siemens in the German market Instances of market entry, for example by Tyco, a firm which is active internationally in the field of fire-alarm security technology technology, and the Austrian firm Schrack, show, moreover, that market entry barriers are not very high. for fire alarms. other types and of it (75) The German market for fire-alarm systems is fairly highly concentrated. Nevertheless, is unlikely that the merger will result in a joint dominant position on the part of Siemens and the other three leading suppliers. Not only are market fire alarms extremely heterogeneous product specifically tailored to the individual customer. Uniform competitive behaviour can therefore be ruled out with a sufficient degree of probability. shares unevenly distributed, but in particular are an — D e n m a r k (76) In Denmark Siemens controls approximately [10 % to 25 %] of the fire-alarm market, and Elektrowatt/Cerberus approximately [25 % to 40 %]. The combined market the therefore parties, according to their share of figures, L 88/14 EN Official Journal of the European Communities 31. 3. 1999 to approximately comes [40 % to 60 %], although some competitors put it significantly lower. A major competitor and previous market leader is the Danish firm Falck, which offers a broad product range in the fields of building security, fire protection and fire fighting. Falck has above all excellent access to the public authorities for example, the fire brigades of more than 60 % of authorities. Other major Danish competitors in the fire-alarm sector in Denmark are the firms Dansk Hustelefon Selskab (market share approximately [5 % to 10 %]), Wormald, the American group Tyco, which is part of (market share approximately [5 % to 10 %]), Semco and Eifa (market shares of less than 5 %). in Denmark as supplies, local it in the Danish (77) The particular advantages which Falck possesses in its home market compared with the parties to the merger will help to ensure that, even after the merger, the company will retain its strong security market position (according to Falck’s own estimates, its market share strong is approximately 50 %). The position of Siemens and Elektrowatt in the fire alarm sector is offset, moreover, by their weak position in intrusion protection and other building security installations (only Elektrowatt is represented in Denmark, with a market share of less than 10 %), since some customers at least purchase a complete building security system from a single supplier. Falck, by contrast, is also strong in the field of intrusion protection and other forms of building security. (78) The possibility that, as a result of the merger, Siemens and Elektrowatt will dominate the (individual) market for fire alarms in Denmark can therefore be ruled out. The same applies to the creation of a market-dominating oligopoly, in view in particular of the products’ lack of of market homogeneity, transparency and the fairly low barriers to market entry. low degree the (b) Intrusion protection/other building security installations (79) According to the parties, the Community-wide market volume of intrusion protection and other building security installations is approximately ECU 3,7 billion. The largest national market here is the United Kingdom (market volume followed by approximately ECU 1 billion), Germany (ECU 750 to 800 million) and France (ECU 550 to 600 million). Siemens has a significant presence in this area only in Germany and Austria; it maintains a slight presence also (market share less than [1 %]) in Italy and the Netherlands. Elektrowatt is likewise not active in all Member States. shares. (80) Only in Germany will there be any significant increase in market In that country, Siemens has a market share of approximately [5 % to 15 %], while Elektrowatt has a market share of approximately (0 % to 10 %]. The market leader in this area is Bosch with, on the Commission’s estimate, market shares of [30 % to 40 %], while a number of other competitors have market shares of up to 10 %. In view of this market structure, the creation of a dominant position or a dominant oligopoly can be ruled out. (81) In all the other Member States, the market shares of Siemens and Elektrowatt are around or below 10 %. In most countries the merger will not lead to any increase in market shares. There the creation of a is clearly no danger of dominant position in these markets. 3. Energy meters, ripple control technology, energy management systems and network control technology (command and control equipment for energy suppliers) (a) Electricity meters share (82) Siemens and Elektrowatt hold substantial shares of the electricity-meter market. Their EEA-wide joint market is put by the parties themselves at approximately [30 % to 45 %] (Siemens [10 % to 20 %], Landis & Gyr [15 % to 25 %]) but is put by competitors on a slightly higher trend. Overlapping does not occur in every Member State. According to its own estimates, Elektrowatt/Landis & Gyr has market shares of [85 % to 100 %] in Greece and [40 % to 50 %] in Portugal, countries in which Siemens is, however, not active. Siemens in turn has a market share of approximately [65 % to 85 %] in Ireland, a country in which Elektrowatt is, however, not active. the Sweden, overlapping. [5 % to 15 %] (83) In all the other Member States, there is a degree of parties, In according to their own figures, have a market share of [< 5 %], Elektrowatt/Landis & Gyr [5 % to 15 %]). In Norway and the United Kingdom the joint market are below 30 % (Norway: Siemens [0 % to 10 %], Elektrowatt/Landis & Gyr [15 % to 25 %] = [20 % to 30 %]; United 25 %], Kingdom: [15 % to (Siemens Siemens shares 31. 3. 1999 EN Official Journal of the European Communities L 88/15 Siemens Elektrowatt/Landis & Gyr [5 % to 15 %] = [20 % to 30 %]. In Germany, Finland, France and Spain, the joint market shares are below 40 % (Germany: Siemens [20 % to 30 %], Elektrowatt/Landis & Gyr [5 % to 15 %] = [30 % to 40 %]; Finland: Siemens [0 % to 10 %], Elektrowatt/Landis & Gyr[20 % to 30 %] = [30 % to 40 %]; France: [< 5 %], Elektrowatt/Landis & Gyr [30 % to 40 %] = [30 % to 40 %]; Spain: Siemens [5 % to 15 %], Elektrowatt/Landis & Gyr [20 % to 30 %] = [35 % to 45 %]). In Italy and the Netherlands, the joint market shares are below 50 % (Italy: Siemens [25 % to 35 %], Elektrowatt/Landis & [15 % to 25 %] = [45 % to 55 %]; Gyr Netherlands: [< 5 %], Elektrowatt/ Landis & Gyr [40 % to 50 %] = [40 % to 50 %]). The parties achieve joint market shares of over 50 % in Belgium, Denmark and Austria (Belgium: 25 %], Elektrowatt/Landis & Gyr [25 % to 35 %] = [45 % to 55 %]; Denmark: Siemens [< 5 %], Elektrowatt/Landis & Gyr [45 % to 55 %] = [20 % to [45 % to 55 %]; Austria: Siemens 30 %], Elektrowatt/Landis & Gyr [35 % to 45 %] = [60 % to 70 %]). [15 % to Siemens Siemens (84) In the markets for electricity meters, besides the parties, Schlumberger is active in almost all Member States. Like the parties, Schlumberger manufactures mechanical, electromechanical and electronic meters. The current market leader, Schlumberger, has an EEA-wide market share of approximately [30 % to 40 %]. According to the Commission’s estimates, Schlumberger’s market share in Belgium/Luxembourg comes to [40 % to 50 %], in Germany [30 % to 40 %], in France [45 % to 55 %], in in Spain [45 % to Portugal 55 %], (Denmark, Norway, Sweden and Finland) [25 % to 35 %] and in Greece, Ireland and Austria [25 % to 35 %]. in Italy [40 % to 50 %], [55 % to 65 %], in the Nordic countries (85) A further competitor active in several Member States is the Slovenian company Iskra Emeco, whose meter-manufacturing plant is in volume terms the largest in Europe. Iskra Emeco, too, manufactures mechanical, electromechanical and electronic meters. The Commission estimates its market share in Germany at [20 % to 30 %], in Belgium at than 20 % and in the Netherlands at [20 % to 30 %]. The company is also active in Denmark, Norway, Sweden, Finland, Italy, Spain and the United Kingdom. The market shares held in these countries are, however, currently still under 10 %. less (86) A significant competitor is the Finnish firm inter alia, Enermet. Enermet manufactures, and control ripple receivers, transmitters automatic meter-reading systems and electronic electricity meters. The its operations used to be Scandinavia, where according to the parties Enermet is the market leader for meters. Enermet is also active in Germany and the Netherlands, where it has permanent establishments. focal point of (87) The ABB group, which is in a strong market position in the USA following its acquisition of the meter business of Westinghouse, is in the process of building up a Europe-wide presence in the electricity meter field. The group currently has electricity meter-manufacturing plants in the EEA in Sweden, Germany and the United Kingdom. Prior to its acquisition in 1996 of the British firm GEC Meters, ABB was active only in the field of electronic meters. Mechanical meters are now also manufactured by ABB in the United Kingdom. According to competitors’ estimates, ABB’s market share in the United Kingdom comes to [10 % to 15 %]. are and locally regionally In Germany, (88) In addition to the abovementioned companies, active there competitors. there is Deutsche Zählergesellschaft (DZG), which is also active, however, to a so far, limited extent in Belgium, In the Netherlands and Austria. Denmark, France, there is Chauvin Arnoux/Matra and Sagem, which supply electronic meters to EdF. Sagem also has an establishment in Spain. In the and United Kingdom, AMPY, Horstmann Polymeters Response International are active in the field of electronic meters. supply companies. in Germany, (89) The purchasers of electricity meters are mainly power Customer concentration differs widely from one Member State to another. Whereas for example, there are approximately 500 power supply companies of varying sizes (ranging from the nine large, interconnected power companies and VEW, such as RWE, PreussenElektra through regional distribution companies to municipal works), suppliers are faced in France, Italy and Greece with only one company (in in Italy: ENEL and in Greece: France: EdF, Public average, Power Corporation). On however, the 20 largest customers account for 80 % of the market volume. The power supply companies have sufficient market knowledge L 88/16 EN Official Journal of the European Communities 31. 3. 1999 and negotiating power, which they exercise by way of Europe-wide calls for tenders. have for mechanical meters (90) The customers surveyed by the Commission have confirmed that prices both for electronic fallen and considerably in the last five years in all Member States. Whereas up until 1993 prices in both meter sectors were fairly stable, they have since collapsed by between 20 % and 40 %. In the opinion of customers, the collapse in prices is due to the active competitive behaviour of suppliers. They mostly believe that the prices of mechanical meters will stabilise at around the reductions are, present however, expected for electronic meters. In the opinion of competitors, the collapse in prices is due companies’ Europe-wide tendering, which has given those companies a better overview of prices. The competitive pressure already existing in the run-up to the liberalisation of electricity markets heralds for the future an even greater cost supply consciousness on the part of power companies and further price pressure on suppliers. level. Further price supply power the to of the revealed existence (91) A further reason for the collapse in prices is the strong competitive pressure from suppliers of electronic meters. The Commission’s enquiries have intensive competition at the levels of the development and manufacture of electronic meters. In recent years there have been a number of market entries in the field of electronic meters, for example ABB in the USA and in the EEA, Sagem in France and AMPY in the United Kingdom. The market entry barriers in this field are at all events very low for a company which is already active in the manufacture of electronic products. Prices for electronic meters have fallen in recent years. (92) The increasing replacement of mechanical meters by electronic ones has increased the price pressure on suppliers of mechanical meters and contributed greatly to the collapse in prices for mechanical meters. The price behaviour of to which both customers and competitors have referred, has, moreover, resulted in other mechanical meter suppliers having to reduce their prices further so as not to lose traditional customers or in order to win back lost business. Iskra Emeco, aggressive (93) In view of these market structures, the proposed merger cannot be expected, despite the high joint market shares, to create or strengthen a dominant position of the parties in individual markets in the Member States most affected, namely Belgium, Denmark, the Netherlands and Austria: — B e l g i u m to 30 %] [15 % (Siemens (Siemens [0 % to (94) The parties’ market shares in Belgium were subject during the last three years to strong variations. According to their own estimates, the parties achieved a joint market share of [45 % to 25 %], 55 %] Elektrowatt/Landis & Gyr [25 % to 35 %]) in 1995/1996. They succeeded over the last three years in almost doubling their market share. In 1994/1995 the joint market share came to [20 % 10 %]), to Elektrowatt/Landis & Gyr [15 % to 25 %]) and in 1993/1994 it came to [15 % to 25 %] (Siemens [5 % to 15 %], Elektrowatt/Landis & [5 % to 15 %]). Their main rivals are Gyr Schlumberger (market share [40 % to 50 %]) less than and Iskra Emeco (market share of 20 %). DZG is also active in Belgium. In Belgium suppliers have essentially one strong customer, Electrabel, whose procurement policy and purchasing decisions determine suppliers’ market shares. Each year Electrabel puts its annual electricity meter requirements up for tender Europe-wide. In the past, Electrabel has purchased electricity meters from at least four different suppliers. There are no reasons why it should change this procurement policy in future. — D e n m a r k to the strong position share of [45 % to 55 %] (95) In Denmark the high joint market shares are due predominantly of Elektrowatt/Landis & Gyr. There will be only a slight increase in market shares. According to their own estimates, the parties achieved a joint market (Siemens [< 5 %], Elektrowatt/Landis & Gyr [45 % to 55 %]) in 1995/1996. In 1994/1995 the joint market share came to [50 % to 60 %] (Siemens [< 5 %], Elektrowatt/Landis & Gyr [45 % to 55 %]) and in 1993/1994 it came to [50 % to 60 %] (Siemens [< 5 %], Elektrowatt/Landis & Gyr [50 % to 60 %]). Whereas in recent years Siemens’s market share was invariably less than [< 5 %], over the same period Elektrowatt/Landis & Gyr has lost about 5 % market share. Besides the Iskra Emeco, ABB and DZG are active in Denmark. Schlumberger, Enermet, parties, 31. 3. 1999 EN Official Journal of the European Communities L 88/17 In Denmark, The customers surveyed by the Commission put their meter requirements up for tender on a Europe-wide basis. electronic meters are increasingly being used in the domestic consumer sphere too. Among suppliers who, like the parties, Schlumberger and Iskra Emeco, also manufacture mechanical meters, there is the remaining supply contracts for mechanical meters. The intensified by price companies, such as Enermet and ABB, which offer for sale only electronic meters, but which wish to increase their shares in the domestic consumer sphere. stiff competition for competition is further — N e t h e r l a n d s their (Siemens [40 % to combined market (96) In the Netherlands too, the large jont market shares are mainly due to the strong position of Elektrowatt/Landis & Gyr. Only a small market share is aggregated. According to the parties’ own figures, share was [< 5 %], 50 %] Elektrowatt/Landis & Gyr [40 % to 50 %]) in 1995/1996, [40 % to 50 %] (Siemens [< 5 %]), Elektrowatt/Landis & Gyr [35 % to 45 %]) in 1994/1995, and [40 % to 50 %] (Siemens [5 %], Elektrowatt/Landis & Gyr [35 % to 45 %]) in the 1993/1994. Other Netherlands are Schlumberger, Enermet, Iskra Emeco and DZG. The customers surveyed by the Commission issue calls for tenders to cover sometimes on a their meter EU-wide basis. Electronic meters have been used in Dutch homes that domestic mechanical meters are now being replaced with electronic ones that both competition mechanical and electronic meters and between them and suppliers of only electronic meters will become increasingly fierce. since 1996. The fact suggests of requirements suppliers between active firms in — A u s t r i a (97) According to the parties’ own figures, in 1995/1996, [20 % to [35 % to 45 %]) (Siemens 65 %] their combined market share was [60 % to 70 %] (Siemens [20 % to 30 %], Elektrowatt/Landis & [55 % Gyr to 30 %], Elektrowatt/Landis & Gyr [30 % to 40 %]) in 1994/1995, and [60 % to 70 %] (Siemens [15 % to 25 %], Elektrowatt/Landis & Gyr [35 % to 45 %]) in 1993/1994. Also present in Austria are Schlumberger (with a market share of [25 % to 35 %]) and, to a lesser degree, DZG and Bayrische Zählerrevision Bauer. to the specific conditions (98) The very large market shares which the parties have hitherto enjoyed in Austria are essentially attributable of competition in that Member State. Prices for electricity meters were subject to public control in Austria until the 1990s. Traditional supply relationships of many years’ standing existed between the few manufacturers in Austria and their customers. This regulated to latter market purchase on a price-conscious basis and to seek out alternative suppliers. the beginning of incentive little gave the confirmed by all these calls for tenders, (99) In recent years, however, prices for electricity meters have fallen drastically (by up to 60 %), a fact which is customers surveyed. The main reason for this has been Austria’s accession to the European Union and the fact that Austrian customers have, since 1995, been issuing Community-wide calls for tenders. Although traditional suppliers have continued to have the upper hand during the first of it cannot be concluded that the parties will, on the basis of their existing high market shares, in future have an insufficiently controllable freedom of action In Austria too, with regard to competition. Europe-wide calls for tenders will lead to a better overview of and further pressure on prices, as has already occurred in the other Member States. It should also be borne in mind that Iskra Emeco is at present seeking to enter the Austrian market. This development will force the traditional suppliers to reduce their prices still further in order not to lose their traditional customers. at or that States reduction an easing of (100) The proposed merger can also not be expected to lead to the emergence of a joint dominant position on the part of Siemens/Elektrowatt and Schlumberger either at the level of the individual Member EEA level. The Commission’s enquiries have not produced any indications competitive conduct between the main suppliers is to be expected. The prices recorded in all Member States is evidence of active price competition between the main suppliers in all the Member States in recent the purchasing power of years. external intensity customers competition, that be to competition between Siemens/Elektrowatt and the Schlumberger will merger. Power supply companies have sufficient market knowledge and negotiating power, which they use via the system of Europe-wide calls for tender. Contracts are now generally awarded In view of and it remain strong after of assumed of meter the is L 88/18 EN Official Journal of the European Communities 31. 3. 1999 the future suggests solely on the basis of low prices. The competitive pressure which already exists in liberalisation of expectation of the power electricity markets that even more supply companies will become cost-conscious and that customers will pressurise suppliers even more for lower prices. It should also be borne the gradual of mechanical meters with replacement increase the pressure electronic meters will in particular on the main of competition, suppliers which, and Siemens/Elektrowatt offer both types. in mind that Schlumberger like (b) Heat meters (101) With regard to heat meters, shares of the aggregate EEA-wide market and Siemens Elektrowatt are only just over [10 % to 15 %] (Siemens [< 5 %], Elektrowatt/Landis & Gyr [5 % to 10 %]). There is a noticeable overlap between the parties only in Denmark (Siemens [5 % to 10 %], Elektrowatt/Landis & Gyr [25 % to 35 %] = [30 % to 40 %]) and Austria (Siemens [5 % to 15 %]), Elektrowatt/Landis & Gyr [25 % to 35 %] = [35 % to 45 %]). In Germany the parties only have a market share of less than 10 %. Beside the parties, Spanner Pollux (SPX) too, which sells heat meters manufactured by Siemens, is active in Germany, with a market share of [20 % to 30 %]. The leading manufacturer Europe-wide is the firm ISTA (market share [20 % to 25 %]), which belongs to the Raab Karcher Group (VEBA). Other important manufacturers are the Danish firms Kamstrup, Danfoss and Grundfos. Some manufacturers of electricity meters also make heat meters Schlumberger, ABB and Enermet). (e. g. (102) The Commission’s investigations have revealed that the conditions of competition for heat meters are to a large extent the same as for electricity meters. The main customers of heat meters are power-supply companies with district heating operations. They issue calls for tenders mainly on a Europe-wide basis. The customers surveyed confirmed that heat-meter prices have fallen sharply in recent years (by up to 50 %). Some expect a further drop in prices in coming years. (103) In view of these market structures, it is not to be expected, despite the high joint market shares, the proposed merger will that lead to the creation or strengthening of a dominant position for the parties on the individual markets in the Member States most affected: Denmark, Austria and Germany. — D e n m a r k (104) The large joint market share in Denmark is the strong position of largely a result of Elektrowatt/Landis & Gyr in that country. Only a small market share is added. The parties’ combined share was, according to their own figures, [35 % to 45 %] (Siemens [5 % to 10 %], Elektrowatt/Landis & Gyr [25 % to 35 %]) in 1995/1996, [40 % to 50 %] (Siemens [5 % to 15 %], Elektrowatt/Landis & Gyr [25 % to 35 %]) in 1994/1995, and [35 % to 45 %] (Siemens [15 % to 25 %], Elektrowatt/Landis & Gyr [20 % to 30 %]) in 1993/1994. The market leader in Denmark is Kamstrup. The merger will lead to the disappearance of one of the main competitors on the market segment of static meters and to the parties’ becoming the second largest the parties and Kamstrup, the firms Grundfos (market share, according to the Commission’s estimate, of less than and 20 %]), Danfoss, Hydrometer Bailey-Fischer and Porter (Germany) sell heating meters. The Commission’s investigations have revealed no indications of any expected easing of competition between the leading suppliers Kamstrup and Siemens/Elektrowatt. supplier. Alongside — A u s t r i a 50 %] (Siemens [10 % to in 1995/1996, (105) According to their own figures, the parties had a joint market share of [35 % to 45 %] (Siemens [5 % to 15 %], Elektrowatt/Landis & Gyr [25 % to 35 %]) [40 % to 50 %] (Siemens [10 % to 20 %], Elektrowatt/Landis & Gyr [25 % to 35 %]) in 1994/1995, and [40 % 20 %], to Elektrowatt/Landis & Gyr [25 % to 35 %]) in 1993/1994. SPX, with a market share of [10 % is also active in Austria. The main to 20 %], ISTA and Kamstrup (with competitors are market shares of some [10 % to 20 %] each) and ABB. According to buyers, Kamstrup has been particularly aggressive competitive in Austria. Given this situation, there are no indications here either that lead to the parties’ obtaining a market share which would allow them to avoid the competitive pressure of other suppliers. noticeable conduct the merger will for its 31. 3. 1999 EN Official Journal of the European Communities L 88/19 — G e r m a n y (106) According to their own figures, the parties achieved a joint market share of [5 % to 15 %] (Siemens [0 % to 10 %], Elektrowatt/Landis & Gyr [0 % to 10 %]) in 1995/1996. The joint market shares in 1994/1995 and 1993/1994 were also under [5 % to 15 %]. In Germany, according to the Commission’s investigations, SPX achieved a market share of [20 % to 30 %] in 1995/1996. The most important competitors are ISTA (market share of approximately [25 % to 35 %]), and Danfoss and Kamstrup, whose market shares however are currently still less than 5 %. Besides Kamstrup, Siemens and Landis & Gyr are the only suppliers of ultrasound heat meters in Germany. However, these account for only 15 % of the heat-meter market at the moment. Given the increasing use of ultrasound meters in Germany and the generally confirmed aggressive price competition from Kamstrup, substantial price competition between Siemens/Elektrowatt/Landis & Gyr and these Kamstrup can be assumed. facts, the there is no reason to believe that merger will lead to a dominant position of the in parties on the market Germany. for heat meters In view of (c) Ripple control transmitters and receivers of share Siemens (Elektrowatt/Landis & Gyr (107) On the market for ripple control transmitters and receivers, which is also small (market volume of less than ECU 100 million), the joint EEA market and Elektrowatt/Landis & Gyr is some [25 % to [15 % to 35 %] 25 %], Siemens [5 % to 15 %]), again according to their own figures. Their competitors estimate that share to be somewhat larger, but not more than 35 %. The main internationally active competitors are Schlumberger (EEA market share, according to the Commission’s estimate, of [25 % to 35 %]), Enermet (EEA market share [15 % to 25 %]), and ABB (EEA market share less than 10 %). Iskra has now also begun to supply ripple initially in Germany. receivers, control homogeneous products. They must be designed to suit the network (including the software) of supply company concerned. The the power in a customers are mostly energy suppliers the quasi-monopsony position. Furthermore, barriers to market entry are low, particularly for firms which come from the electronics sector. The price of ripple control transmitters and receivers, too, has fallen drastically over the last five years. The EEA-wide collapse in prices for ripple control transmitters and receivers shows that in recent years active price competition between the leading suppliers has prevailed. the Given the quasi-monopsony position of opposite side of the market and the intensity of foreign competition, it can be assumed that, even after the merger, there will be substantial competition between the leading suppliers. (d) Energy management systems (109) In the area of energy management systems, which is at present a relatively small market (EEA-wide market volume of some ECU 100 million), it is mainly Elektrowatt/Landis & Gyr which is active, with an EEA-wide market share of some [20 % to 30 %]. Siemens is represented only in Belgium/Luxembourg and Germany, with market shares of less than 10 %. Siemens’ [< 5 %]. EEA-wide market share competitor Schlumberger Europe-wide share of [10 % to 15 %]). There are also a few other national and international suppliers (UPS, ABB, Datawatt). (Community market is important about an is (110) Given the small addition of market share and an EEA-wide combined market share of [20 % to 30 %], it cannot be assumed that the merger will create or strengthen a dominant position. (e) Network control technology (108) In view of an EEA-wide market share of no more than 35 % and the size of the market shares of their closest competitors, it cannot be claimed that the merger will give rise to or strengthen a dominant position. Nor, for the following reasons, is it to be expected that the merger plan will lead to a dominant position of the leading suppliers taken together. Ripple transmitters and receivers are not control It (111) The EEA market volume for network control technology is some ECU 700 million. is difficult to put a precise figure on market shares, since the systems in question are expensive, are tailored to the individual customer, and have a long lifespan (up to 20 years). The award of an individual company might therefore influence its national and EEA market share considerably, which leads to relatively strong fluctuations. The parties estimate their contract to one L 88/20 EN Official Journal of the European Communities 31. 3. 1999 to share, (market according average EEA-wide market share for network control technology in the period 1993/1994 to 1995/1996 at [25 % to 35 %] (Siemens [15 % to 25 %], Elektrowatt/Landis & Gyr [5 % to 15 %]). Important international competitors are ABB the Commission’s estimate, of [7 % to 15 %]) and Cegelec-AEG, the Alcatel-Alsthom Group (market share, according to the Commission’s estimate, of [5 % to 15 %]). Other competitors with smaller market shares (e. g. Harris, PSI, REPAS, Westinghouse) also exist, but some of them belong to large groups. Smaller firms originally active only at national level have also successfully expanded in recent years (e. g. the Austrian firm SAT into Germany, the Netherlands, Denmark and eastern Europe. belongs which to (112) The supply of network control technology is a service-oriented and customer-oriented business, whereby account must be taken of the specific needs of power supply companies. A specific problem is the short duration of software cycles compared to the lifespan of an installation. This that proximity to the customer and means than flexibility are more important strength. The customers are again financial supply companies, which have both power market knowledge and negotiating power. In view of all of these factors, the merger will not lead to, or strengthen a dominant position on this market. factors 4. Payphones (a) Public payphones less than one third of (113) The total volume of the payphones market (both public’ and private’) in the EEA was some ECU 250 to 300 million in 1996, corresponding to an overall quantity of some 480 000 units. Public’ payphones account for about half of the total the total value but quantity. This is because of the higher unit price of public installations. Siemens and Elektrowatt have a stronger market position for public’ payphones, for which the number of suppliers private’ limited, and customers payphones. According to their own information, the parties have a combined EEA market share for payphones as a whole of [25 % to 35 %] (Siemens [5 % to 15 %], Elektrowatt [20 % to than for is least since 1993. leading supplier of 30 %]). The Commission’s investigations have revealed that this share does not exceed [30 % to 40 %]. In the area of public’ payphones, the parties have a much stronger combined market position (with an EU share of over [35 % to 45 %]). Elektrowatt’s subsidiary, Landis & Gyr, has been the public’ In December payphones at the 1996, Spanish thereby and manufacturer Amper significantly improved its own market position. At the level of national markets for public’ payphones, the merger will lead to an added market share only in Germany. Outside that country, Siemens is only active in Spain (via Amper Elasa), where Elektrowatt has only a minimal market for share of indoor (i. e. private’) payphones. some [< 1 %] acquired Siemens Elasa — G e r m a n y Market structure of programme (114) With some 20 % of all installed public’ phones in the EU (more than […] units, including some […] cardphones) and a public’ payphone network density of some two phones per 1 000 the second-largest inhabitants, Germany has market EEA countries. all potential Developments on the German market are currently being defined by the renovation and modernisation public’ operator, Deutsche Telekom. The number of public’ payphones purchased fell between 1994 and 1996 because Deutsche Telekom did not expand its network in view of the planned introduction of a new generation of cardphones. This new system is intended to meet higher security standards. The project has been the subject of a call for tenders. The introduction of these new cardphones from the end of 1997 will lead to existing phones being gradually replaced and to market growth (up to […] payphones per annum, with a total of some […] units). the of (115) Three manufacturers competed for the German public’ payphones market up to 1995: Siemens, Landis & Gyr and Bosch Telekom. The latter stopped developing new public’ payphones in 1995 and now supplies only those phones covered obligations. Nevertheless, Deutsche Telekom has still been able after 1996 to award its contracts to at least outstanding by its 31. 3. 1999 EN Official Journal of the European Communities L 88/21 two suppliers. In view of Deutsche Telekom’s strong purchasing power, the basic conditions for effective competition continued to be met on the basis of existing procurement practice even after Bosch Telecom had withdrawn from the market because, with Siemens and Landis & Gyr, two suppliers were still competing with each other. Effects of the merger — Creation of a dominant position the seems of It buying extremely from two new N. I. K. E. ’, (116) After the merger of Siemens and Elektrowatt, Deutsche Telekom will no longer have the different possibility suppliers. questionable whether effective competition can be restored on the basis of an alternative supplier in the medium term. Siemens and Landis & Gyr have developed system in conjunction with Deutsche Telekom. […]. The public’ payphones market in Germany will, in the foreseeable future, consist of cardphones developed by Siemens and Landis & Gyr and operated For economic the only these phones will be possible Siemens and Landis & Gyr. By approaching these two suppliers for the development of the new card phone system, Deutsche Telekom had ensured that it had at its disposal two suppliers which were independent of each other but which, in particular, were both still familiar with the details of system. The the management merger will mean that Siemens will be the only supplier of the new-generation cardphones. It will therefore have a dominant position on the public’ payphones market in Germany. using Eurochip and technical suppliers of phonecards. reasons, (117) […]. Despite this agreement theoretical cooperation room for manoeuvre laid down by contract, the changes to the market structure caused by the merger lead to a restriction of competition. The will N. I. K. E. between Siemens and Landis & Gyr concerned the development of a new overall system. The powerful customer, Deutsche Telekom, was still able to stimulate competition by awarding its contracts to a number of suppliers. At the same time risk of introducing untried public’ payphones which had possibly not been smoothly adapted to the could avoid the technical it source of requirements of the management system. Since the alternative supply has now disappeared, it no longer has this means of exerting pressure. The investigations carried out competitive have pressure by potential market entrants is not to be expected. confirmed effective that (118) Even if the barriers to entry with regard to the technology developed by Siemens could be overcome by granting a licence, entry into the market is not worthwhile for a new supplier. The new phonecard system is a product line developed specifically for the German market. The market volume is limited, and, alongside Siemens/Landis & Gyr, competitors are already active on this market which were and are traditional suppliers of Deutsche Telekom. These suppliers have developed the new phonecard system together with Deutsche Telekom for the the technology German market and control applied. In addition, Deutsche Telekom has already ordered […] quantities with traditional suppliers. the regarding the overall requirements (119) It should also be remembered that a potential interested party, even if it receives licences for the cardphone technology, does not have the same knowledge of system that Siemens/Landis & Gyr does as the developer of that system […]. For Deutsche Telekom, given the company change of background system, a complete supplier for the remaining delivery quantities […], for which firm orders have not yet been placed with Siemens/Landis & Gyr, would be It can therefore be assumed that too risky. Deutsche Telekom, in order to minimise its risk, would not place an order for the entire delivery quantity remaining with one potential interested party. Thus, the prospects of a potential supplier being awarded a worthwhile contract are very slight. After the merger, therefore, the lock-in effect caused by Deutsche Telekom’s long-term contractual obligation towards the dominant supplier Siemens will prevent any effective pressure being exerted by potential competitors. Conclusion (120) In view of the above, the Commission has come to the conclusion that the proposed merger will L 88/22 EN Official Journal of the European Communities 31. 3. 1999 it no are obligation the merger, pressure. There lead to the emergence of a dominant position on the part of Siemens on the market for public’ payphones in Germany and that competition on that market will be significantly impeded. The Commission also takes the view that, because of the lock-in effect caused by Deutsche Telekom’s long-term contractual towards Siemens, which will be the dominant supplier after remains unlikely that potential competitors will be able to exert effective visible indications that Deutsche Telekom’s purchasing power will be able to offset these effects. The lock-in effect will also continue to be felt after the time limit for fulfilling the contract has expired. As soon as the new cardphone system is of installed, cardphones has replaced, demand in this field for servicing and replacing the installed base will shrink. Market entry for firms which have hitherto not received any orders from Deutsche Telekom will, in view of the few replacement orders available, hardly make economic sense, since access to third-party technology, which is associated with high investment costs, is generally profitable only if the number of units involved is relatively large. been completely generation current the i. e. Commitment given by the parties (121) In the course of the proceedings, the parties informed the Commission that Elektrowatt AG had decided to sell all the business and assets of Landis & Gyr in the area of payphones, chip cards and visual security features for banknotes and security documents to third parties. The sale of the payphones operation could lead the Commission to lift its doubts concerning the emergence of a dominant position in Germany. (122) Should this sale no longer take place before completion of the notified merger, the parties have given the following commitment: sell all their activities and Siemens, see Section 2. 1 of the notification), Elektrowatt AG and the firms associated with it will relating to the development, manufacture and marketing of payphones (public and private) (subject of the disposal) to a third party […]. The third party in question must be independent and unconnected with the Siemens Group and be an existing or potential effective competitor […]. (124) (2) to the ensure, relating Siemens undertakes after completion of the merger and before the said sale, that the subject of the disposal covers all activities development, to manufacture and marketing of public and private payphones. Siemens also undertakes to maintain the same conditions of competition in the subject of the disposal as applied before completion also the merger. undertakes to ensure that, outside the normal course of business, the business assets of the subject of the disposal will not be reduced before the sale […]. Siemens of (125) (3) to the same ensure, Siemens undertakes after completion of the merger and before the said sale of activities, that the future buyer of the subject of the disposal will be placed in the same position (i. e. concerning rights and obligations) with regard to the N. I. K. E. cardphone system jointly developed by Landis & Gyr for Deutsche Telekom as Landis & Gyr was in before the merger. In particular, this means that the buyer jointly will have developed technology of the N. I. K. E. system as Landis & Gyr had before the merger. If Landis & Gyr has its own patents or any other intellectual-property rights and own know-how with regard to the N. I. K. E. system, Siemens undertakes to transfer them to the buyer. If Landis & Gyr does not have its own patents or other and own know-how but has access to the technology developed by Siemens, Siemens undertakes to grant the buyer the same access under the same conditions as are applied to Landis & Gyr. intellectual-property to the rights rights (123) Siemens undertakes to ensure that, after (1) control of Elektrowatt AG acquiring (deadline the agreements between (inter alia) Cre´dit Suisse sole II within the meaning of (126) (4) […], Siemens will, in consultation with the Commission, appoint a trustee (the trustee), for example an investment bank. The latter shall ensure on behalf of the Commission that until the disposal the disposal of the fulfils Siemens the subject of its obligations vis-a` -vis 31. 3. 1999 EN Official Journal of the European Communities L 88/23 Commission, entered into under point 2. The trustee shall also ensure that with regard to the sale Siemens fulfils its obligations vis-a` -vis the Commission, entered into under point 3, […]. Should the sale not occur […], Siemens (127) (5) will the irrevocably transfer authority over subject of the disposal to the trustee, who, […], will carry out the sale at the expense of the owner(s) in accordance with regular commercial principles, […]. (128) (6) Every three months, the trustee shall send the Commission, as well as a copy for Siemens, the a written report on the monitoring of fulfilment of the obligations entered into by Siemens vis-a` -vis the Commission. (129) (7) Before the signing of a binding contract and at any rate every three months, the trustee shall send the Commission, as well as a copy for Siemens, a written report on the progress of negotiations with third parties interested in buying the subject of the disposal. (130) (8) The trustee shall continue the negotiations with an interested third party only if the Commission within two weeks of receiving the trustee’s report does not formally communicate its view that the buyer does not satisfy the conditions of purchase. (131) (9) The duties of the trustee shall end after the subject of the disposal has been sold. (132) (10) […]’ which effective competition will be impeded in a substantial part of the common market. On the basis of the proposed commitment, competitors are being offered the possibility of buying the payphone activities of the subsidiary, Landis & Gyr, on the market for public’ payphones in Germany. After this sale has occurred, the buyer will be in the same position as that previously occupied by Elektrowatt/Landis & Gyr. This will ensure that Deutsche Telekom will still have access the merger. Deutsche Telekom will therefore still be in a position the its manufacture and supply of public’ payphones on the basis of effective competition between Siemens and the other supplier. The Commission has the proposed concluded that commitment is liable to prevent a dominant position from arising or being strengthened on the market for public’ payphones in Germany. to two suppliers after contracts therefore award for to for in Germany. Restriction of (134) The commitment proposed by the parties covers the disposal of the entire payphones division, i. e. all the payphone activities of Landis & Gyr. The the parties have not proposed restricting to the payphone activities of commitment public’ Landis & Gyr on the market payphones the commitment would be considered only if such a commitment were already enough to avert the creation or strengthening of a dominant position in on the market Germany with sufficient certainty. seems extremely doubtful, however, whether a suitable buyer could be found for a disposal that was limited to public’ payphones in Germany, in so far as such a restriction could be applied at all in law and in fact. The proposed commitment is or if therefore strengthening of a dominant position on the market for public’ payphones in Germany is to be averted with sufficient certainty. public’ payphones necessary creation the for It Assessment of this commitment (b) Private payphones (133) The merger leads only in Germany to any significant addition of market shares on the market for public’ payphones. After a careful examination of the plan, the Commission takes the view that the merger will give rise to a dominant position on the part of Siemens on this relevant national market, as a result of (135) On the private’ payphones market, many more suppliers are active EEA-wide than on the public’ Alongside Elektrowatt/Landis & Gyr (with a market share of approximately 18 %), two other competitors, Tetrel and GN-Rathdown, had comparable payphones market. L 88/24 EN Official Journal of the European Communities 31. 3. 1999 to the leading supplier market shares in 1995 (approximately 20 % in each case). Tetrel has considerably improved its market position in recent years, having become the British Telecommunications Group. Other competitors are Schlumberger (1995 market share of some 7 %), Ascom-Monetel (1995 market share of less than 5 %) and FMN Nordhausen (1995 market share of some 6 %), which are active in several Member States. In 1996, the Far Eastern companies Inventec and Vector also entered this market, which indicates that barriers to entry are lower than for public’ payphones. Siemens does not itself manufacture private’ payphones, but it does have a 40 % holding in GTP (1995 market share of some 5 %). the purpose of (136) In the course of the proceedings, the parties informed the Commission that Elektrowatt has now bought GN-Rathdown. According to the this acquisition is to parties, round off’ Elektrowatt’s payphones business with a view to the intended sale and, hence, to improve the terms for that sale. The effects on competition of the acquisition are confined at most to the period before the fulfilment of the commitment to sell. It is not necessary therefore to subject this merely temporary change in Siemens’s position on the private’ payphones market to a more thorough assessment. In view of the existing market structure and given that Elektrowatt’s payphone business is to be sold, plus the fact that Siemens, at the latest when the commitment has been fulfilled, will be active on the private’ payphones market only through its holding in GPT, the Commission has concluded that the merger does not give rise to any doubts regarding private’ payphones market. competition the on 2. Fire-alarm installations, intrusion-protection and other security installations, servicing of fire-alarm installations, and intrusion-protection and other security installations (138) On for the national markets fire-alarm installations and for intrusion-protection and other security installations, and on the national markets for the servicing of such installations, the merger will not give rise to, or strengthen a dominant position which would impede effective competition in the common market or a substantial part thereof. 3. Electricity meters (139) On the national markets for electricity meters, the merger will not give rise to, or strengthen a dominant position which would impede effective common market or a competition in the substantial part thereof. 4. Heat meters (140) The proposed merger does not lead to the emergence or strengthening of a dominant position on the affected markets for heat meters. 5. Ripple control transmitters and receivers (141) The proposed merger does not emergence, or position on the part of affected EEA market transmitters and receivers. lead to the strengthening of a dominant the parties on the control for ripple D. OVERALL ASSESSMENT 6. Energy-management systems 1. Building management systems and their servicing (137) The proposed merger does not lead to the strengthening of a dominant emergence or position on the part of the parties on either the EEA market for building management systems or on the national markets for the servicing of such systems. (142) The proposed merger does not emergence, or position on the part of affected EEA market systems. lead to the strengthening of a dominant the parties on the for energy-management 7. Network control technology (143) The proposed merger does not emergence, or position on the part of affected EEA market technology. lead to the strengthening of a dominant the parties on the for network control 31. 3. 1999 EN Official Journal of the European Communities L 88/25 8. Public’ and private’ payphones (144) The Commission’s investigations have revealed that no dominant position will be created or strengthened as a result of the merger on the private payphone markets. On condition that the commitment given by the parties is fulfilled, this public’ payphones. assessment applies also to V. CONCLUSION (145) For the reasons set out above, subject to the condition that the commitment given by the parties is fulfilled, it is to be assumed that the proposed merger will not lead to the creation or strengthening of a dominant position as a result of which effective competition would be significantly impeded in a substantial part of the Community. Subject to that condition, therefore, the merger is to be declared compatible with the common market and with the functioning of the EEA Agreement pursuant to Article 2(2) of the Merger Regulation and Article 57 of the EEA Agreement, HAS ADOPTED THIS DECISION: Article 1 The notified merger between Siemens AG and Elektrowatt AG is hereby declared compatible with the common market and with the functioning of the EEA Agreement, subject the commitment given by the parties and set out in recitals 123 to 132 of this Decision is fulfilled. to the condition that Article 2 shall be required to report The parties Commission on the fulfilment of Article 1 of this Decision. to the the condition in Article 3 This Decision is addressed to: Siemens AG Wittelsbacherplatz 2 D-80333 München. Done at Brussels, 18 November 1997. For the Commission Karel VAN MIERT Member of the Commission