IP/00/46
Brussels, 18 January 2000
Commission approves the acquisition of parts of
BOC (UK) by Air Liquide (France) subject to
conditions
The European Commission has authorised, after an in-depth investigation
and subject to conditions, the acquisition of parts of the UK company BOC
Group plc, by the French company L’Air Liquide S.A. in the industrial gases
industry. In July 1999, Air Liquide and the US company Air Products
announced a joint bid for BOC. After completion of the takeover bid, Air
Liquide and Air Products plan to divide BOC’s world-wide businesses and
assets. The Commission’s assessment mainly concentrated on the assets
and businesses of BOC to be obtained by Air Liquide in the European
Economic Area (EEA).
The operation, as initially notified to the Commission, would have led to market
dominance by Air Liquide in the European market for tonnage oxygen and nitrogen.
The Commission also had concerns about dominance in the markets for bulk and
cylinder gases in France, the United Kingdom and Ireland, in the market for helium
and in the market for speciality gases supplied to the electronics industry. In order to
eliminate these competition concerns, Air Liquide has undertaken to divest gas
production plants, distribution networks and customer contracts in the United
Kingdom, France, Belgium and the Netherlands as well as certain contracts for
helium. Air Liquide will also make BOC’s patented gases technology available to
other companies. The Commission considered that these commitments were
appropriate to remedy the competition concerns. Therefore, subject to the full
compliance with the offered commitments, the concentration has been declared
compatible with the common market.
« This is an exemplary case of how very serious competition concerns can be
dispelled by real and substantial undertakings by the parties», Competition
Commissioner Mario Monti commented on the decision. « It is because of these
commitments that the Commission was finally able to approve the planned
acquisition . »
Industrial gases form an important component in the production process of many
industries including, for example, iron, steel, refining, chemicals, glass, electronics,
paper and pulp industries. Gases are either supplied in small quantities in cylinders
(cylinder market), or in larger quantities in liquid form using tanker trucks (bulk
market), or are supplied in very large quantities directly on the customers’ premises
using on-site production units or pipelines (tonnage market).
Air Liquide and BOC both produce and/or distribute air gases (oxygen, nitrogen,
argon), carbon dioxide, hydrogen and some speciality gases, in particular, helium
and electronics speciality gases (ESG). The importance of the proposed transaction
is evidenced by the fact that in terms of turnover, Air Liquide is world-wide the
number one supplier of industrial gases, BOC the number two and Air Products the
number four.
In July 1999, Air Liquide and Air Products announced a joint pre-conditional
recommended cash-offer under the UK Takeover Code for all the shares in BOC.
Upon regulatory approval and after completion of the bid, Air Liquide and Air
Products have agreed to divide the world-wide businesses and assets of BOC. The
transaction examined by the Commission focused mainly on those businesses and
assets of BOC that Air Liquide proposes to acquire in the United Kingdom and
Ireland.
On 16 September 1999, the Commission decided (see IP/99/688), after an initial
investigation of one month, that it would further investigate the impact of the
transaction on competitive conditions in the above markets. The Commission’s
decision today, after a five-month investigation, authorises the operation as far as the
European Community and the EEA is concerned.
Tonnage market for oxygen and nitrogen
The investigation confirmed the initial doubts expressed by the Commission that the
proposed concentration would lead to the creation of a single dominant position
(market share of more than 45%) on the tonnage market for oxygen and nitrogen in
the EEA.
In order to remove these competition concerns, Air Liquide will divest five on-site
plant facilities, pipelines and related tonnage contracts in the United Kingdom
(Runcorn, Sheerness, Cardiff, Brinsworth and Fawley), two in France (Pardies and
Tarnos), one in Belgium (Mons) and one in the Netherlands (Terneuzen).
Bulk and cylinder markets in the United Kingdom, Ireland and France
The investigation also confirmed the strengthening of already existing dominant
positions in the markets for bulk and cylinder gases in the United Kingdom, Ireland
and France (market shares ranging from 55% upwards).
To eliminate the Commission’s competition concerns, Air Liquide will divest two bulk
businesses associated with BOC’s tonnage facilities in the United Kingdom
(Brinsworth and Fawley) and three with Air Liquide’s tonnage facilities on the
European Continent (Pardies in France, Mons in Belgium and Terneuzen in the
Netherlands). The assets and businesses to be divested include bulk production and
storage facilities, distribution equipment (road tankers) and customer contracts.
The cylinder assets and businesses to be divested include three cylinder fill plant
facilities in the United Kingdom (Brinsworth, Bristol and Ipswich) and two in France
(Bobigny and Hauconcourt), the associated cylinders, distribution equipment (trucks)
as well as contracts with customers.
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Wholesale market for helium
Following the in-depth investigation, the Commission concluded that the proposed
concentration would lead to the creation of a joint dominant position (market share of
more than 80% in the EEA and more than 70% world-wide) by Air Liquide and Air
Products on the wholesale market for helium. While several elements speak for a
reference market that comprises the wholesale of refined helium to the EEA, the
definite market delineation was left open since the notified operation raised
competition concerns even if a world-wide wholesale market was to be assumed.
To remove the Commission’s competition concerns on this market, Air Liquide will
divest the contracts for liquid helium sources that BOC currently has in Russia and
Poland, together with the appropriate distribution infrastructure (transport
containers). For liquid helium that Air Liquide/BOC purchase in the USA, access will
be granted to other industrial gas companies (including existing BOC wholesale
customers) under resale agreements which in all material conditions, including price
and duration, are identical to the purchasing agreements to which Air Liquide/BOC
are parties (back-to-back agreements). Furthermore, Air Liquide will appoint an
independent third party to manage Air Liquide’s 50% holding in the helium joint
venture with Air Products sourcing helium in Algeria.
Market for Electronic Speciality Gases (ESG) in the EEA
The investigation conducted by the Commission services confirmed that the
proposed concentration would lead to the creation of a joint dominant position
(market share of more than 70%) by Air Liquide and Air Products on the market for
electronic speciality gases in the EEA.
In order to eliminate the competition concerns, Air Liquide will divest its transfill
facility for electronic speciality gases in France (Chalon sur Saone) together with a
licence of the technology necessary to operate the transfill plant, all relevant
customer information and current purchase orders. Air Liquide commits itself to
ensure, within the scope of its existing sourcing agreements, continuity of sourcing
ESGs from existing manufacturers to that transfill facility for a certain period of time
following the divestment.
Intellectual Property
Air Liquide has also agreed to license all of BOC’s patented gases technology
(process and applications technology) to third parties that request such licensed
rights under reasonable and non-discriminatory conditions.
Co-operation with other anti-trust authorities
Pursuant to the bilateral agreement of 1991 on antitrust co-operation between the
European Commission and the United States of America, the European Commission
has closely co-operated with the Federal Trade Commission (FTC) in the analysis of
the transaction that is also being investigated by the FTC.
Air Liquide and Air Products as well as the target, BOC, have substantial gas
businesses in the United States. The assessment conducted by the Commission
relates, however, mainly to the assets and businesses of BOC located in the EEA,
which are to be obtained by Air Liquide. The Commission’s decision in this case
therefore does not prejudge the outcome of the assessment in the United States.
The investigation of the case in the United States has not yet been concluded.
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