AMYLUM EUROPE NV / TATE&LYLE PLC
The Competition Council cleared the acquisition of control over Amylum Europe N. V. (hereinafter: Amylum).
The Tate&Lyle Plc. bought 36.7 per cent of the stocks (providing 50 per cent of the votes) of the Amylum from Compagnie Industrielle et Financiere des Produits Amylaces S. A. (hereinafter: CIP)
Through this transaction, the Tate&Lyle Plc. became the exclusive owner of the Amylum Group.
The Tate&Lyle Plc. is registered in the United Kingdom. The company produces starch and sugar. It supplies also the by-products of sugar and starch production.
The following Hungarian undertakings, or undertakings supplying to the territory of the Hungarian Republic belong to the TL group in Hungary.
A) Eastern Sugar Szolgáltató Kft.
This company is exclusive property of the Eastern Sugar B. V. Eastern Sugar B. V. is owned in 50 per cent by the Tate&Lyle Holland BV. and in 50 per cent by the French company, Saint Luis Sucire SA.
The Eastern Sugar Szolgáltató Kft. provides management services to the Hungarian, Czech and Slovak sugar-works of the Eastern Sugar B. V. so it had no incomes from companies other than the members of the Tate&Lyle Group.
B) The Kabai Cukorgyár Rt. (a Hungarian sugar-work) is owned by Eastern Sugar B. V. to an extent of 99.73 per cent. Its main activity is sugar producing. Its annual turnover in 1999 was 14.1 billion HUF.
C) The KC-KER Kft. is exclusive property of the Kabai Cukorgyár Rt. The KC-KER operates a gas station and beside this activity it produces fodder from the by-products of the sugar-work. In 1999. its turnover was 195 million HUF.
D) The Agrobázis Rt. is in 95.25 per cent owned by the Kabai Cukorgyár Rt. The company processes sugar beets, supplies agricultural implements and it also provides certain services for growers.
E) The Juhocukor a. s. is a Slovak enterprise that exports molasses and sugar in bulk to Hungary. This enterprise is owned by the Eastern Sugar B. V. in 80.28 per cent. Its turnover was 123 million HUF in 1999.
The Amylum Group
The Amylum and the undertakings controlled by it are dealing with the production and the supply of starch made from cereals in France, Belgium, the United Kingdom, Spain, the Netherlands, Italy and Greece. The group also has a leader role on the Eastern-European market of the sweeteners.
The undertakings that belong to it are the following.
A) The Szabadegyházi Szolgáltató és Vagyonkezelő Kft. is the holding company of the Amylum Group. Its turnover, without the incomes from the members of the group, was 1 million HUF.
B) The Hungrana Kft. is in the 50-50 per cent property of the Szabadegyházi és Szolgáltató Kft. and the Agrana International AG. This company deals with the production of iso-sugar and other sweeteners except sugar. It has a turnover of 17.5 billion HUF in 1999.
C) The Hungranatrans Fuvarozó Kft. deals mainly with the transportation of the products of the Hungrana Kft. It is exclusively owned by the Hungrana Kft. Its annual turnover was 14 million HUF in 1999.
The Parties` Position on the Market
The sugar produced by the Kabai Cukorgyár Rt. and the iso-sugar produced by Hungrana Kft. are very similar products. The price of the iso-sugar is only the 90 per cent of the sugar`s price but its usability is limited to industrial purposes.
The by-products of the sweeteners are utilisable as fodder at both products but for different kinds of animals.
There are only two parts of the market of the sugar industry where both of the parties are present. Firstly on the market of sugar and iso-sugar, as these products are substitutes for the food industry. Secondly on the market of the by-products suitable for fodder manufacturing.
On the sugar and iso-sugar market the TL Group`s share is 21 per cent, and the share of the Amylum Group is 17 per cent.
On the secondary market TL has 0.4 per cent, and Amylum has 1.6 per cent market shares, respectively.
As the parties turnover in Hungary exceeded the thresholds laid down in the competition act, the parties had to apply for an authorisation of the Competition Office.
The parties submitted that the planned merger would affect only the market of the sugar produced for industrial purposes and that of the by-products as their other activities do not overlap on the market. They further submitted that in fact Tate&Lyle had already controlled the Hungrana Kft. as the CIP was only a financial investor and it did not instructed the market activities of the sugar-work. Therefore the concentration would not restrict competition in Hungary.
They referred also to the fact that the European Commission had already cleared the merger.
The Competition Council stated that the mere fact that the European Commission had cleared the acquisition did not mean that the investigation under the provisions of the Hungarian competition act might be .
The Council found that the relevant geographic market was Hungary. The relevant products were sugar and iso-sugar and the by-products as raw materials of fodder production.
The concentration would not rise doubts on the by-products market as the parties combined market share would be only 2 per cent. Due to this fact the Council did not examined in depth the relevant market although it considered that the fodder made of the different kinds of by-products might be interchangeable to each other.
But the evaluation of the effects of the concentration on the sugar and iso-sugar market was much more problematical as the parties combined market share would rise to 38 per cent. This share exceeded the threshold of 25-30 per cent under which the concentration usually would not raise serious doubts.
The Council took into account that the Tate&Lyle Group had had a joint control with a financial investor over Amylum. The Council agreed with the European Commission that the fact that the investor had no interest in the sugar and starch industry proved that in fact the business activity of the Amylum was controlled by the Tate&Lyle Plc. and therefore the transaction would not result in a significant change on the market.
November 13, 2000. Budapest
Dr. Bodócsi András sk.
Fógel Jánosné dr. sk.
Dr. Sólyom Eszter sk.