COMPETITION COUNCIL APPROVES THE MERGER OF BP PLC AND E.ON AG(Concentration) Summary
The Competition Council has decided to approve the proposed concentration of BP plc (UK) and E.ON (Germany).
The proposed transaction
In accordance with the pre-agreement signed on 15 July 2001 by the parties, BP acquires from E.ON 51% of the shares of Veba Oel (Germany) through capital increase. 49% of the shares remain with E.ON, and the company has the right to exercise a put option to sell its remaining 49 percent stake in Veba Oel to BP after 31 March 2002. Until the exercise of this right E.ON has the right to veto decisions concerning Veba Oel`s annual budget and business plan. The supervisory body of E.ON has approved the pre-agreement. None of the parties has the right to withdraw unilaterally from the agreement, which becomes effective depending on the approval of the competition authorities.
The undertakings concerned
BP is a global holding company, active in the following sectors: research and exploitation of crude oil and natural gas; oil-refinery, marketing and piping; production and distribution of petroleum derivatives and other petrol-based products; solar energy. BP has three Hungarian subsidiaries operating inter alia on the vehicle and industrial lubricant`s market.
E.ON is a vertically integrated energy company formed as a result of the merger of Veba and Viag at the end of the year 2000 (Vj-10/2000). A branch of the company, Veba Oel is active in the sectors of research and exploitation of crude oil and natural gas, oil-refinery, production of petroleum derivatives and fuel distribution (Aral). Both the Veba and Viag part of the company have several Hungarian subsidiaries, operating inter alia on the lubricant`s market.
The relevant market
In the context of the present proceedings, the Competition Council has focused on the examination of the vehicle and industrial lubricant`s market, where there is an overlap between the parties` activities. The Hungarian market of lubricants is characterised by the considerable market share of MOL and other major players (ExxonMobile and Shell) and the presence of other smaller competitors (OMV, TotalFinaElf), which leaves a market share of 6-7% to BP (BP and Castrol brands) and of 4% to Aral. Also after the concentration, the market will be characterised by the important share of MOL and the presence of several competitors well provided by capital.
Decision of Competition Council
According to the practice of GVH, a concentration carried out abroad may have effects on the territory of the Republic of Hungary if the parties have subsidiaries present on the Hungarian market, therefore the Hungarian Competition Act applies to the present transaction. As a result of the proposed transaction (taking into account E.ON`s right to veto), BP and E.ON acquire joint control of Veba Oel, and in terms of Article 23(1) b) of the Competition Act this constitutes a concentration, which is subject to authorization of GVH due to the turnover of the undertakings concerned.
The concentration affects the market of lubricants, where the parties` market share after the concentration will be around 10%, which does not create considerable market power. There is no overlap on the other fields of activity of the undertakings concerned, consequently, the Competition Council could not establish any vertical, portfolio or conglomerate effects that would create or strengthen dominant position. Taking into account the above the Competition Council has approved the concentration.
March 7, 2002. Budapest
dr. Tóth Tihamér sk. előadó
dr. Bodócsi András s.k.
dr. Köbli József s.k.