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Mergers: Commission takes note of General Court judgment in HeidelbergCement/Schwenk/Cemex Hungary/Cemex Croatia merger case

The European Commission takes note of the judgment of the General Court, which confirms the Commission's decision prohibiting the acquisition by HeidelbergCement and Schwenk Zement, through their 50/50 full-function joint venture Duna-Dráva Cement (“DDC”), of two Cemex subsidiaries in Hungary and Croatia.

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The General Court (T-380/17) fully upholds the Commission’s 2017 prohibition decision under the EU Merger Regulation (case M.7878).

The General Court confirms the Commission’s analysis of cement markets as geographically differentiated markets, in view in particular of transport costs and security of supply concerns. On this basis, the Court confirms the Commission’s approach defining the geographic markets as catchment areas determined by transport distances between the supplier and the customer while taking into account variations in competitive conditions within those markets in the competitive assessment.

The judgment also confirms that the Commission was correct in finding that the takeover of Cemex Croatia, a leading cement producer in Croatia, by its close competitor DDC, would have significantly reduced competition and likely have led to higher prices for grey cement in Croatia.

The General Court further confirmed that the remedies offered by HeidelbergCement and Schwenk – which consisted of granting access to a cement terminal in southern Croatia – were insufficient as they would not have allowed a supplier to compete effectively and on a lasting basis with the merged company.

Background

On 5 April 2017, the Commission prohibited under the EU Merger Regulation the acquisition by Heidelberg Cement and Schwenk Zement, through their 50/50 full-function joint venture Duna-Dráva Cement (DDC), of Cemex Hrvatska (Cemex Croatia) and Cemex Hungária Építőanyagok (Cemex Hungary). Prior to the prohibition, the Commission had referred the analysis of the deal’s potential effects in Hungary to the Hungarian competition authority.

HeidelbergCement and Schwenk are both construction material producers based in Germany. Together they jointly control DDC, a Hungarian company with cement plants in Hungary and in Bosnia-Herzegovina. Cemex Croatia is a subsidiary of the Cemex Group, also a global construction material supplier, and sells cement and other building materials in Croatia and other countries.

Concerning Cemex Hungary, HeidelbergCement and Schwenk Zement decided to re-notify their acquisition of only Cemex Hungary shortly after the prohibition decision, in June 2017. The Commission referred that acquisition again to the Hungarian competition authority (M.8533), which cleared the transaction subject to conditions.

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