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Brussels, 30 September 2004

Commission initiates in-depth examination of the planned Austrian fertilizer wholesale joint venture

The European Commission decided to initiate an in-depth examination into the proposed creation of the joint venture Inter-Fert Düngemittel GmbH (Inter-Fert) by the Austrian companies RWA Raiffeisen-Ware Austria AG (RWA) and AMI Agro Linz Melamine International GmbH (AMI). According to its first findings the Commission cannot exclude that the establishment of the joint venture by the leading Austrian manufacturer of fertilizers AMI and the most important agricultural wholesale organization RWA will create or strengthen a dominant position on the market for fertilizers in Austria and in bordering Bavaria.

On 18 May RWA and AMI notified in accordance with the EU Merger Regulation their planned transaction to establish the joint venture Inter-Fert with the Commission, which examines the transaction’s compatibility with the rules on competition of the common market.

The preliminary examination of the planned merger found that the newly created joint venture could obtain a dominant position on the wholesale market for fertilizers in Austria. The transaction not only leads to the removal of AMI as a competitor of the fertilizer wholesaler RWA on the wholesale level. Through the shareholding of the leading fertilizer producer AMI, Inter-Fert would also receive preferential access to AMI’s production, in particular to the "Linzer Ware" branded products which is particularly appreciated by the farmers. This would weaken the position of competing wholesale dealers and would make retailers - and thus indirectly farmers - dependent on the new joint venture.

Also in neighbouring Bavaria the examination of the Commission resulted in concerns that the merger would further strengthen the outstanding position of BayWa AG, which has a 50%-shareholding in RWA, in the distribution of fertilizers to farmers. The Bavarian farmers also purchase a substantial part of their fertilizers in Austria, particularly from the production of AMI.

The parties offered undertakings, in order to eliminate the Commission’s competition concerns. However, these undertakings are not sufficient in its present form to ensure sufficient access of Austrian and Bavarian wholesalers and retailers to fertilizers in the future. Therefore an in-depth investigation of the merger is necessary.

The initiation of a second phase of merger control proceedings anticipates in no way the investigation and the final decision of the Commission, which must be taken within a period covering approximately four months, presumably until at the latest 14 February of 2005.

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