In electronic form on the EUR-Lex website under document number 32015M7763

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1 EN EUROPEAN COMMISSION DG Competition Case No M TCCC / COBEGA / CCEP Only the English text is available and authentic. REGULATION (EC) No 139/2004 MERGER PROCEDURE Article 6(1)(b) NON-OPPOSITION Date: 09/11/2015 In electronic form on the EUR-Lex website under document number 32015M7763

2 EUROPEAN COMMISSION Brussels, C(2015) 7880 final 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 Where possible the information omitted has been replaced by ranges of figures or a general description. PUBLIC VERSION MERGER PROCEDURE To the notifying party Dear Sir/Madam, Subject: Case M TCCC / COBEGA / CCEP Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/ and Article 57 of the Agreement on the European Economic Area 2 (1) On 2 October 2015, the European Commission received notification of a proposed concentration pursuant to Article 4 of the Merger Regulation by which The Coca- Cola Company ("TCCC", the United States) and Cobega, S.A. ("Cobega", Spain) jointly acquire control over a newly formed entity Coca-Cola European Partners Plc. ("CCEP", the United Kingdom) by way of acquisition of shares. CCEP will combine the activities of the following bottlers: Coca-Cola Erfrischungsgetränke AG ("CCEAG", Germany), Coca-Cola Enterprises, Inc. ("CCE", the United States), Coca-Cola Iberian Partners S.A. ("CCIP", Spain) and Vífilfell hf. ("Vífilfell", Iceland) (all four are jointly referred to as "Merged Bottlers"). 3 TCCC, Cobega and 1 OJ L 24, , p. 1 ('the Merger Regulation'). With effect from 1 December 2009, the Treaty on the Functioning of the European Union ('TFEU') has introduced certain changes, such as the replacement of 'Community' by 'Union' and 'common market' by 'internal market'. The terminology of the TFEU will be used throughout this decision. 2 OJ L 1, , p.3 ("the EEA Agreement"). 3 Publication in the Official Journal of the European Union No C 333, , p. 6. Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË Tel: Fax: COMP-MERGER-REGISTRY@ec.europa.eu.

3 Merged Bottlers are collectively referred to as "Parties", while TCCC and Cobega are referred to as "Notifying Parties". 1. THE PARTIES (2) TCCC is a brand owner, licensor of various trademarks, as well as a producer of soft drink concentrates, syrups, fountain soft drink syrup and finished beverages. TCCC sells its products to bottlers. TCCC wholly owns and controls CCEAG. (3) Cobega is active in several sectors, including bottling and distribution of beverages. It controls CCIP and Vífilfell. (4) CCEAG is a licensed bottler of TCCC branded beverages in Germany. CCIP is a licensed bottler of TCCC branded beverages in Spain, Portugal and Andorra. Vífilfell is a licensed bottler of TCCC beverages in Iceland. Finally CCE is a licensed bottler of TCCC branded beverages in Belgium, France, Great Britain, Luxembourg, the Netherlands, Norway and Sweden. All of these licensed bottlers purchase soft drink concentrates and syrups from TCCC and use them to make finished beverages. 2. THE OPERATION (5) The principal agreement bringing about the transaction is the Transaction Master Agreement ('TMA'), signed on 6 August The Merged Bottlers will be combined into a new publicly listed company CCEP. TCCC and [entity controlled by Cobega] will hold respectively 18% and 34% of CCEP's shares, while the remaining shares will be held by private investors. (6) As regards the governance of CCEP, [entity controlled by Cobega] will appoint five members of CCEP's Board, TCCC will appoint two members, nine members will be non-executive directors and the remaining one the Chief Executive Officer. Following the initial period, TCCC (provided it continues to hold at least 10% of the ordinary shares of CCEP) and [entity controlled by Cobega] (provided it continues to hold at least 25% of the ordinary shares of CCEP) will be entitled to continue to nominate two and five directors, respectively. (7) CCEP's Board will take its decisions by a single majority. However, for decisions concerning approval of the annual budget and business plan of CCEP, appointment of its senior managers and entry into material transactions, the consent of at least one of the CCEP Board members appointed by each of TCCC and [entity controlled by Cobega] will be required. Therefore TCCC and Cobega will jointly control CCEP. (8) Following the transaction CCEP will be a stand-alone bottling entity under the supervision of an independent management team. It will perform all the functions, which are currently carried out by the Merged Bottlers, that is, it will produce, market, distribute and sell non-alcoholic beverages under the trademarks of TCCC and for third-party brand owners. There are no provisions in the TMA that limit the duration of TCCC and [entity controlled by Cobega]'s governance rights in CCEP, save that these governance rights are tied to the level of their respective shareholdings in CCEP. 2

4 (9) Thus the proposed transaction constitutes a concentration within the meaning of Article 3(1)(b) and 3(4) of the Merger Regulation. 3. EU DIMENSION (10) The undertakings concerned have a combined aggregate world-wide turnover of more than EUR million 4 (in 2014, TCCC's revenues amounted to around EUR 35 billion, Cobega's around EUR 3.9 billion). Each of them has an EU-wide turnover in excess of EUR 250 million (in 2014, TCCC achieved approximately EUR 5.6 billion, Cobega approximately EUR [3-4] billion in the EEA) but they do not achieve more than two-thirds of their aggregate EU-wide turnover within one and the same Member State. The notified operation therefore has an EU dimension. 4. ASSESSMENT 4.1. Relevant Markets (11) The supply of non-alcoholic beverages consists of two interrelated activities: brand ownership (including creation and promotion of beverage brand together with production of concentrate and/or finished beverages) and bottling (including preparation, packaging, marketing, sale and distribution of beverages). (12) The Notifying Parties consider that the relevant market for this case is that for nonalcoholic beverages, including carbonated soft drinks, packaged water, still drinks, iced/ready-to-drink teas, fruit juices, waters as well as sports and energy drinks. (13) In its previous decisions related to non-alcoholic beverages, the Commission distinguished between the upstream supply of concentrate 5 and downstream bottling combined with distribution. 6 Within the downstream market for nonalcoholic beverages the Commission has considered the various beverages, such as bottled water, carbonated soft drinks (and within it a segment of cola carbonated soft drinks), juices, still drinks or iced teas to fall into distinct categories. 7 (14) The geographic scope of these markets was considered national due to inter alia differences in consumption patterns, logistics and distribution networks, and marketing strategies. 8 (15) In the present case the precise definition of the relevant product and geographic markets can be left open, as the competitive assessment remains the same, regardless of the market definition. 4 Turnover calculated in accordance with Article 5 of the Merger Regulation. 5 See for example M.2276 the Coca-Cola Company/Nestlé/JV or M.6439 Agrana/RWA/JV 6 See for example M.5633 Pepsico/the Pepsico Bottling Group. 7 M.5633 Pepsico/the Pepsico Bottling Group. 8 See for example M.2276 the Coca-Cola Company/Nestlé/JV 3

5 4.2. Competitive Assessment Horizontal overlaps (16) First, there are no horizontal overlaps between the Merged Bottlers and TCCC or Cobega at the brand level, as the Merged Bottlers in principle do not own beverage brands. The only exception is Vífilfell, which owns a brand for protein beverages and for still water in Iceland. However, TCCC does not own a protein beverage brand, and its still water brand in Iceland (Pure Icelandic) accounts for less than 5% share. Therefore, the combined share of the Parties in still water in Iceland would be less than [20-30]%. The market leader in still water in Iceland is Ölgeroin Egils Skallagrimssonar, with its brand Kristall which has a share of [40-50]%. Other players are Hagar ([10-20]%) and a fringe of smaller rivals with market shares below 5%. (17) Secondly, the Merged Bottlers operate in different EEA countries on the basis of their agreements with TCCC, which confer them with an exclusive licence to market, distribute, bottle and sell TCCC branded beverages in their respective territories. Therefore there is no horizontal overlap between the Merged Bottlers at the bottling level. Moreover, the Merged Bottlers serve different customers (that is, retailers in their respective territories) because agreements are typically negotiated on a national basis Vertical links (18) The Commission has assessed the new vertical links created by the transaction between the Merged Bottlers and the Notifying Parties. The assessment shows that the transaction will not lead to a change in the current relationship between TCCC and the Merged Bottlers (in particular those not currently owned by TCCC), because the Merged Bottlers are currently already focused on TCCC branded beverages, which constitute [90-100]% of their sales. (19) Further, as regards third-party brands distributed by the Merged Bottlers, CCEP intends to continue to bottle their brands, in particular because for the majority of these brands TCCC does not have a comparable offering. (20) Finally, no third-party brand owner relying on the Merged Bottlers and competing with a TCCC brand expressed concerns about the transaction. Respondents to the market investigation carried out by the Commission in order to verify the impact of the transaction on third-party brand owners whose beverages are bottled by the Merged Bottlers have indicated that there are alternative bottlers which are likely to provide an alternative to these Merging Bottlers should that be necessary. Respondents have notably mentioned DIS and Refresco as potential alternative bottlers. 9 9 Reply to Question 5 of questionnaire sent to customers on 5 October

6 5. CONCLUSION (21) For the above reasons, the European Commission has decided not to oppose the notified operation and to declare it compatible with the internal market and with the EEA Agreement. This decision is adopted in application of Article 6(1)(b) of the Merger Regulation and Article 57 of the EEA Agreement. For the Commission (Signed) Margrethe VESTAGER Member of the Commission 5