Mergers - Case 21

Scholz/Gratz: Expert to the Austrian Cartel Court - merger appraisal in the scrap industry

Acquisition of an interest in an Austrian scrap dealer. We were appointed to assist the Austrian cartel court in evaluating a proposed participation of an internationally operating metal scrap dealer in a significantly smaller regional competitor. For the analysis, we conducted in-depth interviews with the parties, other local, regional and supra-regional competitors, small and larger scrap suppliers, and industrial purchasers of the scrap output. Based on the interviews, a differentiated market definition for the different stages of scrap collection, treatment and subsequent sale for recycling was developed according to various scrap product characteristics. In particular, the special status of scrap shredders was identified as the bottleneck for smaller scrap suppliers. A refined analysis of transport costs and regional and local market shares revealed that the acquisition would result in a potentially harmful concentration and market power vis-à-vis the smaller scrap providers, enhanced by the fact that the internationally operating scrap dealer had already acquired a number of scrap dealers with shredders prior to this projected acquisition. The notification was withdrawn by the parties.