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Brussels, 30 october 2001

Commission prohibits acquisition of Sidel by Tetra Laval Group

The European Commission has decided to prohibit the acquisition by Tetra Laval B.V., which belongs to the Swiss-based Tetra Laval Group, the owner of the Tetra Pak packaging businesses, of the French company Sidel SA. The take-over would combine Tetra's dominant position in carton packaging with Sidel's leading position in PET plastic packaging equipment. This would create a dominant position in the market for PET packaging equipment, in particular stretch blow moulding (SBM) machines used for packaging sensitive products, namely fruit juices, liquid dairy products, fruit flavoured drinks and ice-tea beverages. The merger would also strengthen Tetra's dominant position in carton packaging therefore significantly reducing competition in liquid packaging to the detriment of innovation, choice and competitive prices. The undertakings proposed by Tetra Laval were not sufficient to address the Commission's concerns.

Tetra is the world's uncontested leader for carton packaging with an overall market share in Europe of over 80 percent. Sidel, on the other hand, is the leading manufacturer plastic PET packaging equipment and in particular stretch blow-moulding (SBM) machines .

The Commission's in-depth investigation showed that the combination of the dominant company in carton packaging with the leading company in PET packaging equipment would lead to the creation of a dominant position in the European Economic Area (EEA) in the market for PET packaging equipment, in particular, SBM machines used for sensitive products ; and to the strengthening of a dominant position in aseptic carton packaging equipment and aseptic cartons in the EEA. Aseptic packaging is used for long life products which do not require chilled distribution.

There are four major packaging materials used for liquid food packaging : carton, plastic (including PET and HDPE-high density polyethylene), cans and glass. According to market research studies; customers and competitors, PET use for 'sensitive products' will grow significantly in the coming years reflecting consumer preferences. Sensitive products are products which are sensitive to light or oxygen such as liquid dairy products, fruit juices, fruit flavoured drinks, iced tea and coffee drinks.

The Commission believes that, even though today carton and PET packaging equipment are distinct relevant product markets, the two are closely related neighbouring markets and belong in the same industry sector : liquid food packaging. PET and carton are technical substitutes as PET can be an alternative packaging material for all products that are currently packaged in carton. Already PET and carton are used as packaging materials for common product segments (liquid dairy products, juices, fruit flavoured drinks and tea/coffee drinks).

As found in earlier Commission decisions and as confirmed by the Court of Justice (case C-333/94 TetraPak v. Commission), Tetra holds dominant positions in the markets for aseptic carton packaging machines and aseptic cartons.

The combination of Tetra's dominant position in carton packaging and Sidel's leading position in PET packaging equipment would provide the merged entity with the ability and incentives to leverage its dominant position in carton to gain a dominant position in PET packaging equipment. In addition, by eliminating Sidel as a competitor in a closely neighbouring market, Tetra's existing dominant position in carton would also be strengthened.

The merged entity's dominant position in two closely neighbouring markets would be likely to further reinforce one another, raise barriers to entry and reduce competition in the overall market for aseptic and non-aseptic packaging of "sensitive products" in the EEA.

The Commission's analysis was reinforced by the fact that European customers lack buyer power. Even the largest customer does not represent more than five percent of sales and most of them are small and medium sized enterprises. Furthermore, the Commission has received complaints from several customers and competitors. PET and carton competitors, including Elopak of Norway and Germany's SIG and Krones, are also small and therefore unlikely to exert a competitive pressure on Tetra/Sidel.

On 9 October 2001, Tetra proposed a number of undertakings intended to address these concerns, but these undertakings were considered insufficient. Given the serious competition concerns and the fact that Tetra was unable to resolve them, the Commission had no other choice but to prohibit the merger.

In view of the particular circumstances created by the fact that Tetra Laval has already acquired virtually the whole of Sidel's shares, the Commission is prepared to examine the practical arrangements for restoring effective competition


Tetra Laval B.V. (Tetra), the notifying party, belongs to a Swiss based, privately held group of companies which is active in the design and manufacture of equipment, consumables and ancillary services for the processing, packaging and distribution of liquid food (known as the Tetra Pak packaging business). Tetra's business includes traditional carton packaging, where it is the world-wide market leader, and more limited activities in the plastic packaging sector (in particular, Dynaplast). Tetra is also engaged in the supply of equipment, systems, accessories and consumables to dairy farm production and animal husbandry (known as DeLaval).

Sidel SA ("Sidel") is a French company involved in the design and production of packaging equipment and systems, in particular, blow moulding machinery, barrier technology and filling machines for PET plastic bottles. Sidel is the world-wide leading company for the production and supply of blow-moulding machines (SBM machines). The company also has activities in engineering, conveying, overwrapping and palletising, health and beauty.

Tetra launched a takeover bid for Sidel SA on 27 March 2001 through its French subsidiary Tetra Laval S.A. The proposed acquisition was notified to the Commission for regulatory clearance on 18 May 2000 and the Commission opened a 2nd phase investigation on 5 July 2001.

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