The Serbian national competition authority (NCA) has started its second Phase II merger probe of the year – this time in the steel industry.

Who are the parties to the transaction?

The acquirer in the transaction is Kingspan Holding Netherlands B.V., a company of Ireland-based Kingspan Group. The group is active in production and distribution activities throughout Europe, the Far East and the United States. It produces sandwich panels, insulation, lighting and air solutions, water and energy technologies, and data and floor technologies.

The targets are five companies of the steel division of the Romanian company TeraPlast S.A.: TeraSteel S.A. (Romania), TeraSteel d.o.o. (Serbia), TeraSteel Slovakia SRO (Slovakia), Wetterbest SA (Romania), and Cortina WTB SRL (Romania).

How are the parties present in Serbia?

Kingspan Group is in Serbia active through its subsidiary Kingspan d.o.o. Beograd, active in the wholesale of foam sandwich panels and mineral fiber sandwich panels.

On the other hand, the target is in Serbia present through its subsidiary TeraSteel d.o.o. which, apart from wholesale, is also active in the production of foam sandwich panels, mineral fiber sandwich panels and single-layer construction sheets.

What is the relevant market here?

In the merger notification, the applicant proposed two relevant product markets: 1) production and wholesale of foam sandwich panels and 2) production and wholesale of mineral fiber sandwich panels. The NCA seems inclined to accept such definitions.

On the other hand, the NCA and the applicant seem to have different views on the geographic dimension of the relevant market – while the applicant has proposed a regional relevant market, the NCA appears to be sticking to its established position that the relevant geographic market cannot be wider than national.

How serious is the horizontal overlap between the parties?

According to the NCA’s preliminary findings, which led it to the initiation of the Phase II, the overlap between the parties is significant.

Specifically, prior to the transaction, the acquirer and the targets each have a market share in Serbia of 20-30% and post-transaction the combined share will exceed 40%.

The NCA has also noted the transaction would bring about a significant change in the market structure, making the market highly concentrated. In this context, HHI pre-transaction is 1,771 points and post-transaction would be 2,943 points, which is a change of 1,173 index points.

Key takeaway

The Serbian NCA does not open Phase II investigations often – this is only the second such probe this year. During the entire 2019, there were three such in-depth proceedings.

Based on its previous practice, it is unlikely the NCA will prohibit the planned takeover. It is, however, possible that the parties will need to come up with commitments which would be sufficient for the NCA to clear the transaction.


For more information, please contact Dr. Dragan Gajin, Head of Competition at Doklestic Repic & Gajin.