CCA approves two mergers – Petrol d.d. / Crodux Derivati dva d.o.o. and ISKRA d.o.o. / ELKA d.o.o.

By the implementation of the concentration concerned the acquiring company Petrol takes over the following businesses of Crodux Derivati Dva: the wholesale in petroleum products (petrol and diesel engine oils, extra-light heating oil) and the retail in petroleum products (petrol and diesel engine oil and LPG).

For a certain period of time after the implementation of the concentration Petrol intends to keep the brand Crodux for the brand loyalty reasons.

Concretely, the economic and legal analysis showed that the concentration will result in spreading of the Petrol’s retail network in the territory of Croatia by acquisition of the retail outlets of Crodux Derivati Dva, which means that Petrol would hold a market share of some 20 % to 30 % in the territory of Croatia measured by the number of petrol stations, whereas INA d.d. as the leader in the market concerned would keep the market share of some 40 % to 50 %.

The relevant data on the size and the structure of the relevant markets and the analysis investigating both the horizontal and vertical effects of the concentration concerned, indicate that the wholesale petrol products market in Croatia is open and easily accessible to international competitors, meaning, that there are no significant entry barriers for potential participants and no barriers that would impede the growth of the already existing participants in the market. There is significant available and well spread storage capacity in the Croatian territory and the region that ensure the supply for all parts of Croatia and from diversified supply channels. The analysis of the sources and volumes of purchase of petroleum products in the last three years showed that the volumes but also the sources of import of petroleum products significantly varied indicating the fact how the import quickly reacts to the changes in demand and supply.

Besides the market shares, the analysis of the effects of this transaction on the retail petroleum products market also applied the UPP (Upward Pricing Pressure) tool to estimate the risk of this merger giving rise to unilateral effects at individual petrol stations (local effect), which indicated very unlikely possible influence on price increase. In other words, in all the areas there will be a sufficient number of petrol stations of the rivals, which would exclude the possibility of post-merger unilateral price increase by Petrol.

The existing possibility of easy and quick entry of international competitors in case of any price changes in the territory of Croatia represents an element that would destabilize any coordination of behaviour in an anti-competitive way of the existing participants in the market.

In the wholesale market there will be no possibility of exclusionary practices by Petrol given the fact that the buyer can easily purchase necessary volumes from other participants in the market and can relatively easily enter the wholesale market alone. The coordination in the retail market is less likely given the asymmetry of the market shares and the structure of costs of the leading companies. Given its features, the market itself is not susceptible to coordination, taking into account its openness at the wholesale level and weekly price adjustments at the retail level that makes any agreements on coordination of behaviour between buyers impossible or significantly less likely.

The post-merger integration will keep INA in the leading position in the market and it will remain the significant source of supply in petrol products.

On 26 June 2021 the Croatian Competition Agency also approved the acquisition of controlling interest over the undertaking ELKA d.o.o., Zagreb, Croatia by the undertaking ISKRA d.o.o. with its seat in Ljubljana, Slovenia, based on a simplified merger notification.

The concentration concerned will have effects in the relevant markets in the production and sale of industrial cables in the territory of the EU, where ELKA has been present as a manufacturer of power cables, telecommunication, shipboard and offshore and railway cables.

ISKRA is primarily present on the road and railway traffic automation, telecommunication transmission system solutions and energy solutions.

The implementation of the concentration is expected to produce significant synergies relating to both companies, taking into account the former acquisition of the controlling interest of ISKRA over the Šibenik Shipyard. Besides, the transaction is going to produce positive effects on the buyers of industrial cables in the internal market where ELKA has been present and taking into consideration ISKRA’s investment into the new intelligent industrial solutions, new technologies and cutting-edge products. At the same time, the synergy of production technologies and specific know-how of the undertakings concerned will make their products more accessible to the buyers and contribute to quality improvements.

With respect to both above mentioned approval decisions no replies to the requests for information were submitted to the CCA within the prescribed deadline.

Therefore, both concentrations have been assessed in the first phase and rendered compatible within the meaning of the Competition Act and based on the documents and information attached to the notifications and the analyses carried out by the Croatian Competition Agency.