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Brussels, 23rd December 2004

Mergers: Commission opens in-depth investigation into Bertelsmann/Springer rotogravure joint venture

The European Commission has decided to launch a full investigation under the EU Merger Regulation into a proposed rotogravure joint venture between the German companies Bertelsmann, Gruner + Jahr and Springer. After an initial examination, the Commission found indications that the proposed transaction might significantly impede effective competition, in particular on the German market for high volume printing of magazines. Since the transaction also has a considerable cross-border impact, the Commission has decided not to refer the case to the German competition authorities.

The transaction was notified on 4th November 2004 and foresees that Bertelsmann, its subsidiary Gruner + Jahr, and Springer combine their German rotogravure printing activities and a planned printing facility in the UK in a joint venture controlled by Bertelsmann and Springer. The joint venture would be by far the largest rotogravure printer in Europe, even without Bertelsmann’s rotogravure printing business in Spain and Italy which will remain outside the joint venture.

Bertelsmann is a global media company with activities in TV, radio, music, books, magazines, publishing and printing. Its rotogravure activities are operated by its subsidiaries Maul-Belser (Arvato) and Gruner + Jahr, which is also Europe’s largest publishing company. Axel Springer is mainly active in the publishing, printing and distribution of newspapers and magazines.

The rotogravure technique is used for the printing of high volume illustrations such as magazines, catalogues and advertisements and has proven to be the fastest and most cost efficient printing technique for high quality and high volume printing, as compared to other techniques such as heatset web offset.

In its initial investigation the Commission found that the markets for rotogravure printing of catalogues and advertisements may be larger than the German national market whereas the market for rotogravure printing of German magazines is national in scope. On the German market for high volume printing of magazines the joint venture would have a combined market share of more than 40%. It would be the clear market leader far ahead of its competitors. In view of these findings, the Commission decided to open an in-depth investigation.

The opening of a second-stage merger investigation does not prejudge the Commission’s final decision. The Commission has 90 working days to reach a conclusion on whether or not the transaction would seriously impede competition within the European Economic Area (EEA) or a substantial part of it. This period can be extended by 20 working days if requested by one of the notifying parties or by the Commission with the agreement of the notifying parties and by 15 working days if companies offered remedies after the 54th working day following initiation of the in-depth inquiry.

The German competition authority (‘Bundeskartellamt’) had requested the referral of the case as its main impact will be in Germany. However, in the light of the Europe-wide effects of the transaction, the Commission has decided not to refer the case to the ‘Bundeskartellamt’.

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