Case No COMP/M.5316 STRABAG/ CEMEX. REGULATION (EC) No 139/2004 MERGER PROCEDURE. Article 4 (4) Date: 10/11/2008

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1 EN Case No COMP/M.5316 STRABAG/ CEMEX Only the English text is available and authentic. REGULATION (EC) No 139/2004 MERGER PROCEDURE Article 4 (4) Date: 10/11/2008

2 COMMISSION OF THE EUROPEAN COMMUNITIES In the published version of this decision, some information has been omitted pursuant to Article 17(2) of Council Regulation (EC) No 139/2004 concerning non-disclosure of business secrets and other confidential information. The omissions are shown thus [ ]. Where possible the information omitted has been replaced by ranges of figures or a general description. Brussels, 10/11/2008 SG-Greffe(2008)D/ C(2008)6892 PUBLIC VERSION MERGER PROCEDURE ARTICLE 4(4) DECISION To the notifying party: To the Austrian Competiton Authority To the Hungarian Competiton Authority Dear Sirs, Subject: Case No COMP/M.5316 STRABAG/ CEMEX Reasoned submission pursuant to Article 4(4) of Regulation No 139/2004 for referral of the case to Austria and Hungary Date of filing: Legal deadline for response of Member States: Legal deadline for the Commission decision under Article 4(4): I. INTRODUCTION 1. On 6 October 2008, the Commission received by means of a Reasoned Submission a referral request pursuant to Article 4(4) of the Council Regulation (EC) No 139/2004 ( EC Merger Regulation ) with respect to the transaction cited above. The parties request the transaction to be examined in its entirety by the competent authorities of the Austria and Hungary; the Austrian part of the transaction, be examined by the competent authorities of Austria and, the Hungarian part of the transaction, be examined by the competent authorities of Hungary. 2. According to Article 4(4) of the EC Merger Regulation, before a formal notification has been made to the Commission, the parties to the transaction may request that their transaction be referred in whole or in part from the Commission to the Member State where the concentration may significantly affect competition and which present all the characteristics of a distinct market. Commission européenne, B-1049 Bruxelles / Europese Commissie, B-1049 Brussel - Belgium. Telephone: (32-2)

3 3. A copy of this Reasoned Submission was transmitted to all Member States on 8 October By letter of 10 October 2008, the Hungarian Competition Authority as the competent authority of Hungary informed the Commission that Hungary agrees with the proposed referral. 5. By letter of 22 October, the Austrian Competition Authority as the competent authority of Austria informed the Commission that Austria agrees with the proposed referral. II. THE PARTIES 6. Strabag SE ("Strabag") is an Austria-based international construction company, active in the building and construction industry, in particular building construction, civil engineering, road construction and underground engineering; in further neighbouring services (e.g., project development) as well as the manufacture and distributions of building materials. 7. Cemex Austria AG ("Cemex") is also an Austria-based undertaking active in Austria and Hungary in the production of ready-mix concrete, aggregates, paving stones, admixtures and in the businesses of technical services, earth-moving and cellar construction, waste management. III. THE OPERATION AND CONCENTRATION 8. The transaction involves a concentration by which the undertaking Strabag intends to acquire within the meaning of Article 3(1)(b) of the EC Merger Regulation sole control of the undertaking Cemex by way of purchase of shares. The Share Purchase and Acquisition Agreement was signed on 30 July IV. COMMUNITY DIMENSION 9. The combined aggregate worldwide turnover of the companies exceeds EUR million and both companies have a Community turnover in excess of 250 million EUR million. There is no Member State in which Strabag generated more than 2/3 of its aggregated Community turnover. Cemex generated more than 2/3 of its aggregated Community turnover in Austria. The transaction therefore has a Community dimension within Article 1(2) of the EC Merger Regulation. V. ASSESSMENT A. RELEVANT PRODUCT MARKETS 10. On the basis of the information submitted by the parties, the following relevant markets can be identified: (i) the supply of ready-mix concrete in Austria; (ii) the supply of ready-mix concrete in Hungary; (iii) the supply of aggregates in Austria; (iv) the supply of aggregates in Hungary; (v) the supply of paving stones in Hungary and (vi) the road construction market in Austria. 11. Ready-mix concrete is produced by mixing cement, aggregates, water, and certain additives and it is used as a basic material for on-site moulded concrete constructions. Aggregates are key component in the construction and maintenance of highways, roads, and streets, and are also an indispensable ingredient in concrete. Aggregates are 2

4 obtained from quarries and aggregates banks through exploitation and mining and transported to concrete plants to be added to the concrete mix. Paving stones are concrete products made with low water-cement ratio under high pressure and vibration (complementary building materials across the value chain) and which consist of sand, gravel or crushed stone, cement, water, colorants. Finally, within the construction industry the following activities might constitute separate markets: building construction (construction of public buildings residential buildings, shopping centres) road construction and infrastructure and engineering construction (engineering activities and construction of special infrastructure such as railroads, dykes etc.) 1. B. Relevant geographic market 12. Concerning ready mix concretes, the product has to be delivered within a radius of km, therefore the Commission in its past decisions has considered these markets to be local in scope 2. With respect to aggregates, as transportation costs represents about 50% of the total aggregates cost and customers are usually supplied within a radius of around km the Commission in the past has considered local markets with a radius of around km around the production site. 3 As for paving stones the feasible transport distance, based on the information in the Reasoned Submission, is approximately 100 km markets appears to be local, sub-national or at utmost national 4. Finally, the different construction markets are usually considered to be national On the basis of the information submitted in the Reasoned Submission, the proposed acquisition affects local, sub-national or at most national markets for ready-mix concrete and aggregates in Austria and Hungary and it impacts the market(s) for paving stones in Hungary. The geographic focus of the proposed concentration would be local or sub-national but at utmost national. C. Assessment Legal requirements under Article 4 (4) 14. The Commission has assessed whether there are indications that the concentration significantly affects competition in a market or markets and whether the markets in question are within a Member State and present all characteristics of a distinct market. 1 See previous decision COMP/M.4719 Heidelbergcement/Hanson; COMP/M.3572 CEMEX/RMC; COMP/M.3267CRH/Cementbouw; COMP/M.5158 STRABAG/Kirchhoff. 2 See COMP/M.4719 Heidelbergcement/Hanson, para. 29, 44; COMP/M.3572 CEMEX/RMC, para. 22 with reference to earlier decisions. 3 COMP/M.4719 Heidelbergcement/Hanson, para. 39; COMP/M.4298 Aggregate Industries/Foster Yeoman, para. 13 with reference to earlier decisions. 4 Cf. COMP/M.3267 CRH/Cementbouw, para COMP/M.5158 STRABAG/Kirchhoff para 15 and 19 (building conshuction and road construction);comp/m.4087 Eiffage Macquarie/APRR para. 26 (infrastructure and engineering construction). 3

5 15. Strabag submits that combined market shares of the parties on a national level in Austria for the supply of ready-mix concrete would be [20-30]%. On sub-national level, overlap would occur in East Tyrol and Karnithia ([10-20]%), in Lower Austria West ([30-40]%) and in Burgenland ([10-20]%). For the supply of aggregates in Austria overlaps occur in the Vienna area ([10-20]%) as well as in the Northwestern and the Northeastern corner of Styria ([5-10]% and [10-20]% respectively). With respect to the supply of ready-mix concrete in Hungary by combining STRABAG and Cemex, the number [ ] and [ ] on the market a [ ] would be created with approximately [20-30]% market share. In Central Hungary the combined market share is estimated by Strabag to [20-30]%, in West-Hungary to [20-30]% in North-East Hungary to [20-30]% and in South-East Hungary to [30-40]%. The market(s) for paving stones in Hungary may also be affected by the proposed transaction. Cement is an input product for paving stones. Although Strabag is not active on the market for paving stones, where the market share of Cemex is [20-30]%, it is a cement supplier in Hungary. Finally, the market for road construction might be vertically affected as Strabag estimates that it has a [20-30]% market share in Austria. 16. In view of the foregoing and in accordance with points 17 and 18 of the Commission Notice on Case Referral in respect of concentration 6, the assessment suggests that the principal effects of the proposed transaction would be restricted within the territory of Austria and Hungary. Furthermore, the markets in question present all the characteristics of distinct markets; they are not bigger than national. The concentration may significantly affect these relevant markets in Austria and Hungary. It follows that the legal requirements of Article 4(4) of the Merger Regulation are met. Additional factors 17. Given that the likely focus of the competitive effects of the proposed transaction is confined to Austria and Hungary, the Austrian Competition Authority ("Bundeswettbewerbsbehörde") and the Hungarian Competition Authority ("GVH") are well placed to examine the Austrian and Hungarian markets respectively. Also, both competition authorities in Austria and Hungary have dealt extensively with the relevant product markets in their previous decisions at several occasions 7. 6 OJ C 056, 05/03/2005, p E.g. recent decisions by the Bundeswettbewerbsbehörde: BWB/Z-761 (2008) STRABAG SE/ Gruppe Mobil Baustoffe/Kärnten (regarding ready-mix concrete); BWB/Z-338 (2007) Asamer Holding AG/Hans Kostmann Beteiligungs AG/Wopfinger Transportbeton Ges.m.b.H./CEE Chemicals Vagyonkezelö Korlátolt Felelösségü Társaság Kft (regarding ready-mix concrete); BWB/Z-193 (2006) Lafarge Perlmooser GmbH/PINTA Baumaterial GmbH/Lasselsberger GmbH (regarding ready-mix concrete); BWB/Z-789 (2008) Zementwerk Leube Gesellschaft mb.h./leupe Industrieverwaltung GmbH/Quarzsande GmbH (regarding aggregates, and other construction materials); BWB/Z-97 (2006) ABW Abbruch, Boden- und Wasserreinigungs-Gesellschaft m.b.h./johann Koller Gesellschaft m.b.h. (regarding, inter a-lia, aggregates). E.g. recent decisions by the GVH: Case Vj-81/2007 Holcim Hungária/Pannonbeton (regarding ready-mix concrete); Case Vj-193/2006 Hans Kostmann Beteiligungs/Wopfinger Transport-beton/CEE Chemicals Vagyonkezelő/Lasselsberger Hungária (regarding ready-mix concrete); Case Vj-110/2006 Holcim Cesko, C.B s.r.o (regarding ready-mix concrete); Case Vj-184/2006 Donau Kies, Asdag Kavicsbánya (regarding aggregates). 4

6 VI. REFERRAL 18. On the basis of the information provided by the parties in the Reasoned Submission, the case meets the legal requirements set out in Article 4(4) of the EC Merger Regulation in that the concentration may significantly affect competition in markets within two Member States which present all the characteristics of a distinct market. 19. The Commission considers, on the basis of the information submitted in the Reasoned Submission, that the principal impact on competition of the concentration is liable to take place on distinct markets in Austria and in Hungary respectively. VII. CONCLUSION 20. For the above reasons and given that both Member States, Austria and Hungary expressed its agreement to take jurisdiction, the Commission has decided to refer the transaction to be examined by Austria with respect to the Austrian markets and to Hungary with respect to the Hungarian markets. This decision is adopted in application of Article 4(4) of Council Regulation (EC) No 139/2004 and Article 6(1) of Protocol 24 to the EEA Agreement. For the Commission (Signed by) Philip LOWE Director General 5