The merger concerned the acquisition of all of the shares in and sole control of Terreal Holding S.A.S.
The AFCA had applied to the Cartel Court for an in-depth review since there was a risk that the merger would lead to a stronger market position for the company Wienerberger AG, with negative consequences for competition. This mostly concerned the area of small-scale roofing materials for pitched roofs (see press release of 1 February 2023). The Federal Cartel Prosecutor also applied for an in-depth review, with the two official parties constantly keeping in touch and coordinating their efforts.
Cartel Court review – conditions adopted
The Cartel Court obtained an economic expert opinion on the situation in the relevant market, allowing it to assess the future impact on competition.
The expert opinion confirmed AFCA’s concerns that the merger could not be classed as harmless for competition. The Cartel Court stated that the market for small-scale roofing materials for pitched roofs was highly concentrated in Austria and that only four strong companies would remain in this market after the merger.
Following its review, the Cartel Court found that a merger cleared without conditions would pose a “real danger”, inasmuch as nearly 90% of the market segment of clay roof tiles would then fall to the acquiring company, preventing effective competition. Such a high degree of market concentration would be detrimental to customers as they would not have a sufficient number of alternative suppliers to choose from.
“In markets with a falling range of options, there is always a risk of negative consequences on prices and of customers having to pay more. I think it is really important that the AFCA takes its independent control function seriously and carefully looks into those markets in which prices have been soaring,” explains interim Director General Natalie Harsdorf-Borsch.
Merger approved by Cartel Court subject to conditions
The conditions imposed by the Cartel Court are aimed at ensuring that the acquired company’s “Eastern Business” (namely Creaton South East, Creaton Polska and the Austrian operations of Creaton Germany) is maintained in the relevant Austrian market after the merger has been completed.
Against this background, Wienerberger AG had to commit to continue supplying the Austrian business with clay roof tiles and concrete roof tiles (plus granting licensing rights to use the “Creaton” brand) for a transitional period following completion of the merger. To enable verification of compliance with this condition, Wienerberger AG must submit comprehensive reports to the AFCA and the Federal Cartel Prosecutor. Furthermore, Wienerberger AG is prohibited from actively enticing away members of the Austrian sales team working for Creaton’s Eastern Business for a defined period of time.
Terreal Holding S.A.S, in turn, had to commit to convert a production site in Hungary, which would enable the company’s Eastern Business to manufacture a sufficient amount of clay roof tiles for the Austrian market in the future. Terreal Holding S.A.S must also ensure that the sales team is well enough staffed to cover the market in Austria. These conditions are also subject to comprehensive obligations to report to the AFCA and the Federal Cartel Prosecutor.
Please refer to the following document (in German) for detailed information on the conditions:
Conditions (Phase II) Z-6156 Wienerberger AG/Terreal Holding S.A.S (non-confidential version)