The Competition Authority announced, on its official website, the Board's reasoned decision1 of unconditional approval regarding the transaction concerning the acquisition of sole control over Vive B.V. ("Vive") by Toyota Industries Europe AB ("Toyota Europe"), which is controlled by the Toyota Industries Corporation ("TICO") ("Transaction"). Through this Transaction, TICO will ultimately gain sole control over Vive and its subsidiaries, including Vanderlande Industries Holding B.V. ("Vanderlande").
Although the parties contended that the Transaction would not affect any relevant markets in Turkey, given that the parties' activities in Turkey do not overlap horizontally or vertically, the Board nevertheless determined that the Transaction would lead to a "conglomerate" concentration, due to the fact that the activities of the parties are complementary or substitutes for each other. Thus, this decision is one of the rare cases in which the Board reviewed the effects of a conglomerate concentration.
The Board referred to Paragraph 9 of the Guidelines for the Assessment of Non-Horizontal Mergers and Acquisitions ("Non-Horizontal Mergers and Acquisitions Guidelines"), which defines conglomerate concentrations as transactions between the suppliers of products that are complementary or weak substitutes for each other, or products that are in the same product range. Moreover, by referring to Paragraph 90 of the Non-Horizontal Mergers and Acquisitions Guidelines, the Board stated that, in conglomerate concentrations, the relationship between the parties is neither horizontal (i.e., as competitors in the same relevant market) nor vertical (i.e., as suppliers or customers). As per the information provided within the merger control filing, the Board resolved that TICO's balanced forklifting trucks and material handling activities, including storage equipment, were complementary to Vanderlande's industrial automation processes. Furthermore, the Board pointed out that Bastian Solutions Inc. ("Bastian"), which TICO is planning to acquire by way of a separate transaction, was also active in the industrial automation processes market.
In this respect, the Board defined the relevant product markets as the "industrial automation processes market" and the "production and sales of equipment for material handling market."
The Board then referred to Paragraph 91 of the Non-Horizontal Mergers and Acquisitions Guidelines, which states that conglomerate concentrations rarely lead to the creation or strengthening of a dominant position that results in a significant reduction of competition in the relevant markets. The Board stated that the parties' market shares in Turkey and the competitive landscape of the relevant markets should be taken into account in order to evaluate the possibility of the realization of unilateral and coordinated effects.
The Board ultimately found that the parties' market shares in Turkey did not indicate a dominant position in either of the two relevant product markets, and thus, decided that the markets did not possess a structure that would lead to exclusionary behaviors or coordinated effects.
The Board also stated that, in terms of conglomerate mergers, market foreclosure is realized through unilateral conducts in the form of tying, bundling and other exclusionary behaviors.
The Board concluded that certain products offered by TICO in the market for the production and sales of equipment for material handling were complementary to Vanderlande's products in the industrial automation processes market in Turkey. That being said, the Board nevertheless decided that the Transaction would not pose a risk of significantly reducing competition in either of the relevant product markets that are complementary to each other, given that TICO has a low market share in the market for the production and sales of equipment for material handling in Turkey.
Furthermore, the Board reviewed the complementary nature and substitutability of the products and services offered by Bastian and Vanderlande. Although the Board found that there was a complementary and weak substitutability link between Bastian's and Vanderlande's products and services, it also took into consideration the following relevant facts: (i) Bastian's activities were geographically focused on the United States of America, and (ii) Vanderlande did not have a market share in Turkey that could be deemed risky based on the structure of the market. Accordingly, the Board concluded that the Transaction would not result in the creation or strengthening of a dominant position through any unilateral or coordinated effects.
The Board also emphasized that factors such as incentive and capability (especially capability) are critically important in the realization of market foreclosure. The Board found that the market shares of the Transaction parties and the market structures of the two relevant product markets would not bestow sufficient market power or the capability to foreclose the market on the Transaction parties. Consequently, the Board decided that the Transaction did not raise any competition law concerns, given that the merged entity would not have the market power to foreclose the market. Accordingly, the Board decided unanimously to grant its unconditional approval to the Transaction.
Footnote
1. The Board's Vive B.V. decision, dated 06.04. 2017 and numbered 17-12/143-63.
This article was first published in Legal Insights Quarterly by ELIG, Attorneys-at-Law in December 2017. A link to the full Legal Insight Quarterly may be found here.
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