Polwax S.A. v European Commission (T-585/20)

Contents

Judgment of the General Court (Third Chamber, Extended Composition)14 June 2023^note(Competition — Concentrations — Upstream market for slack wax — Downstream market for paraffin waxes — Decision declaring the concentration compatible with the internal market and the EEA Agreement — Absence of commitment to supply slack wax — Vertical effects — Foreclosure of the input market)In Case T‑585/20,Polwax S.A., established in Jasło (Poland), represented by E. Nessmann and G. Duda, lawyers,vEuropean Commission, represented by N. Khan, G. Meessen and J. Szczodrowski, acting as Agents,supported byPolski Koncern Naftowy Orlen S.A., established in Płock (Poland) represented by M. Mataczyński, lawyer,THE GENERAL COURT (Third Chamber, Extended Composition),composed of F. Schalin, President, S. Frimodt Nielsen, P. Škvařilová-Pelzl, I. Nõmm (Rapporteur) and D. Kukovec, Judges,Registrar: M. Zwozdziak-Carbonne, Administrator,having regard to the written part of the procedure,further to the hearing on 11 January 2023,gives the following

Judgment

1By its action under Article 263 TFEU, the applicant, Polwax S.A., seeks the annulment of the Commission Decision of 14 July 2020 (Case M.9014), adopted under Article 8(2) of Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (OJ 2004 L 24, p. 1; ‘the contested decision’), by which the European Commission declared a concentration between Polski Koncern Naftowy Orlen S.A. (‘Orlen’) and Grupa Lotos S.A. (‘Lotos’) to be compatible with the internal market and with Article 57 of the Agreement on the European Economic Area (EEA), subject to Orlen’s compliance with certain commitments.

I.Background to the dispute and events subsequent to the bringing of the action

2The applicant is a Polish company producing and marketing paraffin waxes and paraffin-based products.

3Orlen is a vertically integrated undertaking, mainly active in the refining and marketing (including retail sales) of fuel and related products in Poland, the Czech Republic, Lithuania and Germany. It is also active in upstream exploration, development and production of crude oil and natural gas and on the petrochemicals market.

4Lotos is a vertically integrated undertaking, mainly active in the refining and marketing (including retail sales) of fuel and related products, mostly in Poland. It is also active in upstream exploration, development and production of crude oil and natural gas.

5On 3 July 2019, Orlen notified the Commission, under Article 4(1) of Regulation No 139/2004, of a proposed concentration consisting of the acquisition of sole control of Lotos.

6By a decision of 7 August 2019 (OJ 2019 C 273, p. 2), the Commission took the view that the concentration raised serious doubts as to its compatibility with the common market, decided to open an in-depth investigation pursuant to Article 6(1)(c) of Regulation No 139/2004 and invited interested third parties to submit any comments they might have on the proposed concentration.

7On 30 September 2019, following a request to that effect, the applicant was granted the status of a party concerned, within the meaning of Article 18(4) of Regulation No 139/2004.

8On 7 April 2020, the Commission adopted a statement of objections, a non-confidential version of which was sent to the applicant on 4 May 2020.

9On 15 May 2020, the applicant submitted its comments on the statement of objections and argued that commitments should be established in order to ensure that the concentration does not affect its access to certain inputs that it used in its production processes.

10On 14 July 2020, the Commission adopted the contested decision.

11In a press release of the same date, the Commission stated, first, that, following its investigation, it was concerned that the transaction, as originally notified, would harm competition, in particular in the following markets:– the wholesale supply of motor fuels in Poland;– the retail supply of motor fuels in Poland;– the supply of jet fuel in Poland and the Czech Republic;– the supply of related products, such as different types of bitumen, in Poland.

12Second, the Commission argued that, in order to allay its fears, Orlen had offered commitments in relation to the markets referred to in paragraph 11 above.

13Third, the Commission stated that ‘the combination of divestitures and other commitments would enable the purchasers of the divested businesses, as well as other competitors, to compete effectively with the merged entity in the relevant markets in the future’, that, ‘in the wholesale diesel and gasoline markets in particular, the purchaser of the stake in the refinery [would] be able to import significant volumes thanks to greater access to infrastructure’ and that, ‘through this combination of refining capacity and import potential, the purchaser [would] exert a competitive constraint similar to that of Lotos before the transaction’. The Commission therefore found that ‘the transaction, as modified by the commitments, would no longer raise competition concerns’ and stated that ‘this decision is conditional upon the full compliance with the commitments’.

14At the time the action was brought, on 24 September 2020, no summary of the contested decision had been published in the Official Journal of the European Union and no non-confidential version of that decision had been published on the Commission’s website.

15On 18 May 2021, the Commission published a non-confidential version of the contested decision on its website. A summary of that decision was published in the Official Journal of the European Union on 25 May 2021 (OJ 2021 C 196, p. 8).

16The contested decision contains a paragraph 37 concerning the upstream supply of slack wax and downstream supply of paraffin waxes (recitals 1993 to 2006).

17In recital 1993 of the contested decision, the Commission recalls, in the first place, that slack wax is a by-product of base oils production and that it is used mainly as feedstock for production of fully refined paraffin waxes, which – in turn – constitute the main raw material for candle manufacturing. The Commission then pointed out in recital 1994 of the same decision that, while both Orlen and Lotos produce slack wax, only Lotos sells it to customers and Orlen uses all of its production captively to manufacture paraffin waxes. Therefore, the envisaged concentration would lead to a vertical link between the parties, with Lotos active upstream and Orlen downstream.

18In the second place, in recital 1997 of the contested decision, the Commission found that the relevant product markets were those for slack wax and paraffin waxes.

19In the third place, as regards the geographic dimension of the relevant markets, the Commission recalled in recital 1999 of the contested decision that it had held in an earlier decision that the market for slack wax could be EEA-wide or national, while pointing out that one slack wax buyer, the applicant, expressed preference for local sources of supply due to high transport costs. In the same recital, the Commission also held that defining the market for paraffin waxes as being EEA-wide was plausible, since the suppliers of that product had indicated that they sold it beyond the borders of Poland and Orlen sold between 30 and 40% of its production outside Poland, mostly in the EEA. It then contended, in recital 2000 of the contested decision, that it had assessed the effects of the proposed concentration on the narrowest potential markets, namely Poland for slack wax and the EEA for paraffin waxes.

20In the fourth place, as regards the effects of the proposed concentration on competition, the Commission examined, in recital 2003 of the contested decision, the possibility, highlighted by the applicant, that the concentration would lead to input foreclosure, claiming that the new entity would no longer supply it with slack wax or would do so only at a much higher price, thereby preventing it from competing with the applicant on the paraffin waxes market.

21In that regard, the Commission held in recital 2004 of the contested decision that, if the upstream slack wax market were defined as national, Lotos would have a market share of between 30 and 40% in Poland in 2017 and 2018. While acknowledging that such a market share implied the existence of vertical effects, the Commission pointed out that between 60 and 70% of the sources of slack wax were still available and that Orlen itself used external suppliers. The Commission inferred from this that it did not appear that the new entity created would have the ability to foreclose access to slack wax for Lotos’ customers active on the paraffin waxes market.

22The Commission added, in recital 2005 of the contested decision, that Orlen had only a very small share of the downstream market and deduced from that that the new entity would not have an interest in foreclosing access to inputs for Lotos’s customers active on that market either. The Commission noted that the applicant itself stressed that competition on the said market was lively, in some instances occurring at a global scale and with the Chinese producers also exerting pressure.

23The Commission affirmed in recital 2006 of the contested decision that its investigation did not reveal compelling indications pointing to a significant impediment to effective competition with regard to the vertical link between the slack wax market in Poland and the paraffin waxes market in the EEA.

II.Statement of the forms of order sought by the parties

24By a separate document, the Commission raised a plea of inadmissibility under Article 130(1) of the Rules of Procedure of the General Court. Consideration of the plea of inadmissibility was reserved for the final judgment.

25At the hearing, the Commission withdrew its plea of inadmissibility, formal note of which was taken in the minutes of the hearing.

26In the action, the applicant claims, in essence, that the Court should:– annul the contested decision;– order the Commission to pay the costs.

27In addition, in its comments on Orlen’s statement in intervention and at the hearing, the applicant claimed that the Court should order an expert’s report on the effects of the concentration on competition or, failing that, order the Commission to provide the information on the basis of which it established the grounds of the contested decision.

28The Commission and Orlen contend, in essence, that the Court should:– dismiss the action as unfounded;– reject the applicant’s request for an expert’s report;– order the applicant to pay the costs.

III.Law

A.The request for an expert’s report

29The applicant requests that the Court order an expert’s report on the effects of the concentration on competition. It justifies the delay in submitting that request, in essence, by the fact that it was only at the stage of the statement in intervention that the reasoning behind the decision in question was explained. It refers, in that regard, to the failure to publish that decision as at the date on which the action was brought and to the summary nature both of the grounds set out in that decision and of the Commission’s written pleadings.

30The Commission and Orlen oppose that request for an expert’s report, emphasising, inter alia, that it was submitted too late.

31Pursuant to Article 88(1) of the Rules of Procedure, ‘measures of inquiry may be taken or modified at any stage of the proceedings either of the General Court’s own motion or on the application of a main party’. Article 88(2) states that ‘where the application is made after the first exchange of pleadings, the party submitting that application must state the reasons for which he was unable to submit it earlier’.

32Irrespective of whether the applicant has provided convincing justification for the late formulation of its request for an expert’s report, it must be recalled that the Rules of Procedure confer discretion on the General Court to decide whether or not it is appropriate to order such a measure (see, to that effect, judgment of 13 July 2017, Talanton v Commission, T‑65/15, not published, EU:T:2017:491, paragraphs 35 to 37). Therefore, even where an application for an expert’s report has been made to the Court by a party at an advanced stage of the proceedings, it may still decide to adopt that measure of its own motion, in the exercise of its discretion.

33The applicant’s request for an expert’s report must, however, be rejected since it goes beyond the scope of the measures of inquiry referred to in Article 91 of the Rules of Procedure, which consists of allowing proof of the truth of the factual claims made by a party in support of its pleas in law (see, to that effect, judgment of 23 May 2014, European Dynamics Luxembourg v ECB, T‑553/11, not published, EU:T:2014:275, paragraph 317 and the case-law cited).

34By its request, the applicant asks the Court to order an expert’s report on ‘neighbouring markets, including the market for the refining of slack wax, for the following factors: (a) effects of the concentration … on competition on the relevant markets for slack wax and paraffins and neighbouring markets, in particular the impact of the concentration on product prices for end customers and consumers; (b) the effect of that concentration on the applicant’s economic situation and that of the other operators carrying out an activity identical to that of the applicant as regards the refining of slack wax, paraffins and neighbouring markets; (c) higher costs incurred by the applicant as a result of purchasing slack wax outside the local market; (d) limiting access to slack wax on the local market; (e) the percentage of European market shares of the merged operator following the concentration’.

35Rather than seeking to prove the veracity of certain factual claims, the purpose of such a request is, in reality, to re-examine the assessments in the contested decision relating to the compliance of the proposed concentration with Article 2(1) to (3) of Regulation No 139/2004. Therefore, it goes beyond the scope of a measure of inquiry within the meaning of Article 91 of the Rules of Procedure, with the result that the Court would exceed its jurisdiction by adopting such a measure (see, to that effect and by analogy, judgment of 12 September 2013, Besselink v Council, T‑331/11, not published, EU:T:2013:419, paragraphs 24 and 25).

B.The substance of the pleas

36In the action, the applicant put forward, in essence, two pleas in law, alleging, respectively, infringement of Article 2(1) to (3) of Regulation No 139/2004 and of Article 9(1) of that regulation. In addition, in the reply, the applicant put forward a new plea in law, alleging that the statement of reasons for the contested decision is inadequate.

37At the hearing, the applicant withdrew the plea alleging infringement of Article 9(1) of Regulation No 139/2004, formal note of which was taken in the minutes of the hearing.

1.The first plea in law, alleging infringement of Article 2(1) to (3) of Regulation No 139/2004

38The applicant maintains, in essence, that paragraph 37 of the contested decision, in which the Commission found that the concentration would not lead to a significant impediment to effective competition on the market for paraffin waxes, is based on an incorrect application of Article 2(1) to (3) of Regulation No 139/2004.

39According to Article 2(1) of Regulation No 139/2004:‘Concentrations within the scope of this Regulation shall be appraised in accordance with the objectives of this Regulation and the following provisions with a view to establishing whether or not they are compatible with the common market.In making this appraisal, the Commission shall take into account:(a) the need to maintain and develop effective competition within the common market in view of, among other things, the structure of all the markets concerned and the actual or potential competition from undertakings located either within or outwith the [European Union];(b) the market position of the undertakings concerned and their economic and financial power, the alternatives available to suppliers and users, their access to supplies or markets, any legal or other barriers to entry, supply and demand trends for the relevant goods and services, the interests of the intermediate and ultimate consumers, and the development of technical and economic progress provided that it is to consumers’ advantage and does not form an obstacle to competition.’

40Article 2(2) of Regulation No 139/2004 states that ‘a concentration which would not significantly impede effective competition in the [internal] market or in a substantial part of it, in particular as a result of the creation or strengthening of a dominant position, shall be declared compatible with the [internal] market’ and Article 2(3) states that ‘a concentration which would significantly impede effective competition, in the [internal] market or in a substantial part of it, in particular as a result of the creation or strengthening of a dominant position, shall be declared incompatible with the [internal] market’.

41The applicant’s argument in support of this plea in law can be divided into two parts, contesting either the Commission’s assessments of the definition of the relevant markets or its assessments of the effects of the concentration on those markets.

(a)The first part, alleging incorrect definition of the relevant markets

42The applicant maintains, in essence, that the Commission infringed Article 2(1)(a) of Regulation No 139/2004 by incorrectly defining the relevant markets.

43According to case-law, a proper definition of the relevant market is a necessary precondition for any assessment of the effect of a concentration on competition (see, to that effect, judgment of 31 March 1998, France and Others v Commission, C‑68/94 and C‑30/95, EU:C:1998:148, paragraph 143).

44In that regard, it must be observed that the relevant product market comprises all those products or services which are regarded as interchangeable or substitutable by the consumer, by reason of their characteristics, their prices and their intended use. More specifically, the concept of the ‘relevant market’ implies that there can be effective competition between the products or services which form part of it and this presupposes that there is a sufficient degree of interchangeability between all the products or services forming part of the same market in so far as a specific use of such products or services is concerned (judgment of 23 January 2018, F. Hoffmann-La Roche and Others, C‑179/16, EU:C:2018:25, paragraphs 50 and 51).

45Furthermore, where it is alleged that the Commission failed to have regard to a possible competition concern on markets other than those covered by the competitive analysis, it is for the applicant to adduce compelling indications of the genuine existence of a competition concern which, by reason of its effect, should have been examined by the Commission. In order to discharge that burden, the applicant should identify the relevant markets, describe the state of competition in the absence of the merger and indicate what would be the likely effects of a merger given the state of competition on those markets (judgments of 4 July 2006, easyJet v Commission, T‑177/04, EU:T:2006:187, paragraphs 65 and 66, and of 13 May 2015, Niki Luftfahrt v Commission, T‑162/10, EU:T:2015:283, paragraphs 174 and 175).

46In paragraph 37 of the contested decision, the Commission identified two markets affected by the concentration, namely, on the one hand, an upstream market consisting of the supply of slack wax in Poland and, on the other, a downstream market consisting of the supply in the EEA of paraffin waxes, which use slack wax as a raw material.

47In the first place, the applicant takes issue with the Commission for having limited the definition of the downstream market for paraffin waxes solely to ‘fully refined paraffin waxes’, namely waxes manufactured from light-grade slack wax, which is used as a raw material for candle manufacturing, and for not including waxes based on medium-grade and heavy-grade slack wax, which are used for the manufacture of memorial candles and various industrial preparations.

48That complaint is based on a misreading of the contested decision.

49In recital 1993 of the contested decision, the Commission observed that ‘slack wax [was] a by-product of base oils production [and that] it [was] used in multiple applications, but mainly as feedstock for production of fully refined paraffin waxes, which – in turn – constitute[d] the main raw material for candle manufacturing’. In recitals 1996 and 1997 of that decision, the Commission stated that it was assessing the effects of the concentration on the markets for slack wax and paraffin waxes.

50First, it cannot be inferred from recital 1993 of the contested decision that the Commission defined the downstream market for paraffin waxes more restrictively, referring only to fully refined paraffin waxes. On the contrary, in that recital the Commission explicitly pointed out that slack wax was used ‘in multiple applications’ and not exclusively for the production of fully refined paraffin waxes.

51Second, in recital 1997 of the contested decision, the Commission referred to a market consisting generally of paraffin waxes, and not only fully refined paraffin waxes.

52Third, this conclusion is supported by a reading of the earlier Commission decisions to which recital 1997 of the contested decision refers and in the light of which the definition of the downstream market for paraffin waxes is consistent.

53Thus, in recital 4 of Commission Decision C(2008) 4576 final of 1 October 2008 relating to a proceeding under Article 81 of the Treaty establishing the European Community and Article 53 of the EEA Agreement (Case COMP/C.39181 – Candle Waxes) (summary published in OJ 2009 C 295, p. 17), paraffin waxes were defined as comprising ‘fully refined paraffin waxes and semi-refined paraffin waxes (depending on the content of oil) as well as hydro-finished waxes, wax blends, wax specialties and hard paraffin waxes’, which ‘are used for the production of a variety of products such as candles, chemicals, tyres and automotive products as well as in the rubber, packaging, adhesive and chewing gum industries’.

54It follows that the downstream market was not limited, in the contested decision, solely to fully refined paraffin waxes, as the applicant asserts, but to all paraffin waxes, as defined in paragraph 53 above.

55The present complaint must therefore be dismissed.

56In the second place, it should be noted that the applicant’s written pleadings contain a number of references to the various types of slack wax, namely ‘light-grade’, ‘medium-grade’ or ‘heavy-grade’, and to their different properties and uses. In so far as those references must be understood as constituting an objection alleging an incorrect definition of the upstream market on the ground that the Commission ought to have held that there were three different markets, concerning those three types of slack wax, such an objection cannot succeed.

57It was for the applicant to adduce compelling evidence to demonstrate that there was not a sufficient degree of interchangeability between ‘heavy-grade’ slack wax, ‘light-grade’ slack wax and ‘medium-grade’ slack wax for them to belong to the same market.

58More specifically, in the light of the method set out in the Commission Notice on the definition of the relevant market for the purposes of [EU] competition law (OJ 1997 C 372, p. 5; ‘the Notice on the definition of the relevant market’), it was for the applicant to adduce compelling evidence to demonstrate that the different types of slack wax were not sufficiently substitutable on the demand side and the supply side for them to belong to the same market.

59From the point of view of demand, the applicant ought to have adduced compelling evidence to demonstrate that customers of one type of slack wax would not refer to another type of slack wax in the event of a slight increase in price, so that they could not be regarded as substitutable (see, to that effect, paragraphs 15 to 20 of the Notice on the definition of the relevant market).

60From the point of view of supply, the applicant ought to have adduced compelling evidence to demonstrate that suppliers of one type of slack wax could not switch their production to the production of another type of slack wax and market it in the short term without incurring any substantial additional costs or risk in response to small and permanent changes in relative prices (see, to that effect, paragraphs 20 to 24 of the Notice on the definition of the relevant market).

61In paragraphs 112 to 120 of the reply, the applicant merely points out that light-grade slack wax, medium-grade slack wax and heavy-grade slack wax are inputs of different raw materials. In other aspects of its argument, the applicant claims that the quality of slack wax can vary significantly from one refinery to another. However, such allegations do not amount to compelling evidence demonstrating that there is not a sufficient degree of interchangeability between these different types of slack wax for them to be substitutable from the point of view of demand. In any event, the applicant does not address the question of possible supply side substitutability.

62Such a complaint by the applicant, even if it had been made, should, therefore, be rejected as unfounded.

63In the third place, the applicant maintains, in essence, that the Commission was wrong to take into account, in the upstream market, slack wax imported into Poland and that the Commission ought to have limited the definition of that market solely to slack wax produced and marketed in Poland. The applicant justifies this claim by the difference in quality of slack wax depending on its refinery of origin and the cost of transporting it from abroad.

64Such an argument cannot succeed either.

65As is apparent from paragraphs 15 to 20 of the Notice on the definition of the relevant market, as summarised in paragraph 59 above, products belong to the same market, in particular, if they are perceived as substitutable by the consumer.

66The applicant does not dispute that the supply of slack wax used by Polish customers prior to the concentration consisted not only of Lotos, the sole producer of slack wax in Poland offering that product on the market, but also of suppliers located outside that territory. The applicant itself acknowledges that it used imports of slack wax from France, Italy, Hungary and the United Kingdom.

67The applicant’s argument is, in reality, based more on the advantages which slack wax from Lotos represents for it from the point of view, in particular, of its lower transport cost, the diversity of the types of slack wax offered or their suitability for its manufacture of paraffin waxes, since they were part of the same company until 2012.

68Nevertheless, such considerations are irrelevant, in so far as the demand for slack wax in Poland is not exclusively satisfied by domestic production, but also not by imports, meaning that there is effective competition, on the Polish market, between the national supply of slack wax and the foreign supply of slack wax, justifying the inclusion of the latter in the definition of the relevant market.

69That conclusion is not invalidated by the new evidence submitted by the applicant on 13 December 2022 and 5 January 2023, highlighting the increase in the cost of freight and the impossibility of obtaining slack wax from Russian refineries as a result of the actions of the Russian Federation destabilising the situation in Ukraine.

70In that regard, and without there being any need to consider the admissibility of that evidence in the light of Article 85 of the Rules of Procedure, it is sufficient to point out that, in so far as it relates to events subsequent to the contested decision, it is irrelevant, since the lawfulness of the contested decision must be examined in the light of the facts existing at the time when the decision was adopted (see, to that effect, judgments of 4 July 2006, easyJet v Commission, T‑177/04, EU:T:2006:187, paragraphs 203 and 204, and of 9 July 2007, Sun Chemical Group and Others v Commission, T‑282/06, EU:T:2007:203, paragraph 59).

71In the light of the foregoing, this part of the plea in law must be dismissed.

(b)The second part, alleging incorrect assessment of the effects of the concentration on the relevant markets

72The applicant maintains, in essence, that the Commission infringed Article 2(1)(b) and Article 2(2) and (3) of Regulation No 139/2004, as regards the assessment of the effects of the concentration on both the slack wax market and the paraffin waxes market.

73As a preliminary point, the plea of inadmissibility raised by the Commission, alleging that the arguments put forward by the applicant, referring expressly to an infringement of Article 2(2) and (3) of Regulation No 139/2004, do not meet the requirements of clarity and consistency in Article 76(d) of the Rules of Procedure, must be rejected.

74Although the section of the action dealing specifically with the alleged infringement of Article 2(2) and (3) of Regulation No 139/2004 is limited to two paragraphs, the applicant refers in that section to the more detailed line of argument which it put forward in respect of the alleged infringement of Article 2(1) of that regulation. The Commission was therefore in a position to understand the arguments put forward by the applicant in support of its challenge of the assessment of the effects of the concentration.

75This part of the plea can be divided into two complaints, by which the applicant disputes, respectively, the failure to examine the horizontal effects of the concentration on the slack wax market and the merits of the examination of the vertical effects of the concentration on the paraffin waxes market.

(1)The first complaint, alleging failure to examine the horizontal effects of the concentration on the slack wax market

76The applicant points out, in essence, that Orlen was itself a producer of slack wax, meaning that its purchase of Lotos also had a horizontal dimension. It infers from this that the Commission failed to examine the horizontal effects of the concentration, which it was required to do pursuant to the Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of concentrations between undertakings (OJ 2004 C 31, p. 5; ‘the Guidelines on Horizontal Mergers’).

77The Commission contends that the concentration could not have horizontal effects on the slack wax market, given that Orlen was not present on that market.

78As the Commission points out in paragraph 22 of its Guidelines on Horizontal Mergers, there are two main ways in which horizontal mergers can significantly impede effective competition, in particular by creating or strengthening a dominant position.

79The first is the case of non-coordinated or unilateral effects, where the merger eliminates important competitive constraints on one or more firms, which consequently would have increased market power, without resorting to coordinated behaviour.

80The second is the case of coordinated effects, where the merger changes the nature of competition in such a way that firms that previously were not coordinating their behaviour are now significantly more likely to coordinate and raise prices or otherwise harm effective competition. A merger may also make coordination easier, more stable or more effective for firms which were coordinating prior to the merger.

81Therefore, since it is settled that Orlen did not market its slack wax production, the merger could not have led to a reduction in supply on the slack wax market. From that point of view, it could not lead to the elimination of ‘significant competitive constraints on that market’, to the creation of ‘increased market power’ for the benefit of firms present on that market or to facilitating coordination on the market, within the meaning of the Guidelines on Horizontal Mergers.

82In addition, the applicant does not complain that the Commission failed to examine the possibility, envisaged in paragraphs 58 to 60 of the Guidelines on Horizontal Mergers, that the merger would produce anti-competitive effects as a result of a combination of an undertaking already present on the market, Lotos, and a potential competitor, Orlen.

83In any event, in the light of the circumstances of the case, the Commission cannot be seriously criticised for not having expressly envisaged that possibility.

84As stated in paragraph 60 of the Guidelines on Horizontal Mergers, in order for the merger to have significant horizontal effects, it would have been necessary for the likelihood of Orlen entering the slack wax market on the supply side to constitute a significant constraint on the suppliers currently present on that market, prior to the merger. The existence of such a constraint was ruled out on account of Orlen’s status as a purchaser on that market, as referred to in recital 2004 of the contested decision.

85In the light of the foregoing, the present complaint must be dismissed.

(2)The second complaint, alleging incorrect examination of the vertical effects of the concentration on the paraffin waxes market

86The applicant maintains that the Commission was wrong to find, in recitals 2004 and 2005 of the contested decision, that Orlen, following the acquisition of Lotos, would have neither the ability nor the incentive to pursue a strategy of foreclosing access to slack wax on the paraffin waxes market.

87The Commission, supported by Orlen, contends that it was entirely correct to rule out the possibility of such foreclosure.

88As stated in paragraph 31 of the Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control of concentrations between undertakings (OJ 2008 C 265, p. 6; ‘the Guidelines on non-horizontal mergers’), input foreclosure arises where, post-merger, the new entity would be likely to restrict access to the products or services that it would have otherwise supplied absent the merger. According to paragraph 32 of those guidelines, when assessing the likelihood of an anti-competitive input market foreclosure scenario, the Commission examines, first, whether the merged entity would, post-merger, have the ability to significantly foreclose access to inputs, second, whether it would have the incentive to do so and, third, whether a foreclosure strategy would have a significant negative impact on competition downstream.

89It must be observed that those three conditions are cumulative, so that the absence of any of them is sufficient to rule out the likelihood of input foreclosure (see judgment of 27 January 2021, KPN v Commission, T‑691/18, not published, EU:T:2021:43, paragraph 112 and the case-law cited).

90As regards the first condition, the Commission found, in recital 2004 of the contested decision, that Orlen, following the merger, would not have the ability to foreclose access to slack wax since ‘there still [would remain] more than [60‑70%] of the market as available source of slack wax supply’.

91As the Commission states in paragraph 35 of the Guidelines on non-horizontal mergers, ‘for input foreclosure to be a concern, the vertically integrated firm resulting from the merger must have a significant degree of market power in the upstream market’ and ‘it is only in these circumstances that the merged firm can be expected to have a significant influence on the conditions of competition in the upstream market and thus, possibly, on prices and supply conditions in the downstream market’.

92In that regard, the Commission states, in paragraph 36 of the Guidelines on non-horizontal mergers, that the ‘merged entity would only have the ability to foreclose downstream competitors if, by reducing access to its own upstream products or services, it could negatively affect the overall availability of inputs for the downstream market in terms of price or quality’, that ‘this may be the case where the remaining upstream suppliers are less efficient, offer less preferred alternatives, or lack the ability to expand output in response to the supply restriction, for example because they face capacity constraints or, more generally, face decreasing returns to scale’ and that ‘also, the presence of exclusive contracts between the merged entity and independent input providers may limit the ability of downstream rivals to have adequate access to inputs’.

93The applicant bases the new entity’s ability to foreclose the market on the fact that the other suppliers of slack wax have less choice as to products, can supply only insufficient quantities, have products of lower quality and constitute random sources, due to administrative or political difficulties, or face excessive logistical difficulties. In addition, the applicant provides, as an annex to its comments on the statement in intervention, a comparative analysis of the types of slack wax which it uses according to its suppliers (Lotos and others), highlighting, in essence, the differences between them.

94In the first place, for the reasons set out in paragraphs 65 to 69 above, it must be observed that the Commission was correct to include slack wax imported into Poland in its definition of the upstream market.

95In the second place, and consequently, the Commission was also correct to find, in essence, in recital 2004 of the contested decision, that a substantial part of the supply of slack wax on the market would not be affected by the concentration.

96In the third place, it follows that the existence of imports of slack wax into Poland made it unlikely that, following the merger, Orlen would have the ability to foreclose access to that market, with the applicant remaining able to switch to alternative sources of supply in the event that the slack wax controlled by Orlen was no longer accessible to it, or was accessible only to a lesser extent.

97In the fourth place, the applicant’s arguments based on differences in quality between the imported slack wax and that provided by Lotos, supply difficulties and transport costs linked to slack wax from other sources do not show that the new merged entity would be in a position to ‘negatively affect the overall availability of inputs for the downstream market in terms of price or quality’, within the meaning of paragraph 36 of the Guidelines on non-horizontal mergers.

98First, as regards the emphasis on the difference in quality between the slack wax produced by Lotos and the imported slack wax, it should be noted that this is a subjective consideration, specific to the applicant, arising from its membership of the Lotos group until 2012 and implying that its manufacturing process is based on the characteristics of slack wax from Lotos refineries. Moreover, that consideration is, to a certain extent, contradicted by the applicant’s previous use of imported slack wax.

99Second, the supply difficulties and transport costs associated with imported slack wax, even if proved, should nonetheless be put into perspective, since a substantial part of slack wax sold on the Polish market, prior to the concentration, already resulted from imports.

100Third, for the reasons set out in paragraphs 69 and 70 above, the applicant’s emphasis, on 13 December 2022 and 5 January 2023, on a price increase and a reduction in sources of supply outside Poland subsequent to the merger cannot be taken into account for the purposes of reviewing the merits of the Commission’s assessments.

101The Commission was therefore right to find that the first of the conditions which must be met in order for the existence of a foreclosure of the input market to be found was not satisfied in the case at hand. In view of the cumulative nature of those conditions, as recalled in paragraph 89 above, that finding is sufficient to justify the rejection of the present complaint.

102In any event, it should be noted that the Commission also correctly applied the second condition in finding that there would be no incentive for the new merged entity to foreclose the input market.

103In recital 2005 of the contested decision, the Commission was correct to use Orlen’s very small market share on the paraffin waxes market and the intensity of competition on that market as its basis to rule out any incentive, on the part of the new merged entity, to adopt a strategy of foreclosure of the upstream slack wax market.

104As the Commission points out in paragraph 40 of the Guidelines on non-horizontal mergers, ‘the incentive to foreclose [inputs] depends on the degree to which foreclosure would be profitable’. According to that paragraph, ‘the vertically integrated firm will take into account how its supplies of inputs to competitors downstream will affect not only the profits of its upstream division, but also of its downstream division’. Lastly, the same paragraph states that ‘essentially, the merged entity faces a trade-off between the profit lost in the upstream market due to a reduction of input sales to (actual or potential) rivals and the profit gain, in the short or longer term, from expanding sales downstream or, as the case may be, being able to raise prices to consumers.’

105The applicant maintains, in essence, that an incentive to pursue a strategy of foreclosure of slack wax would lie in the possibility of increasing prices on the paraffin waxes market.

106It must be observed that, in recital 2000 of the contested decision, the Commission defined the market for paraffin waxes as being EEA wide, that, in recital 2002 of the contested decision, it observed that Orlen had a market share of between 5 and 10% and that, in recital 2005 of the contested decision, it noted that competition was lively. Those assessments have not been disputed by the applicant.

107However, in view of these characteristics of the downstream market, the Commission could reasonably find, in recital 2005 of the contested decision, that there was no incentive for the new entity to restrict access to slack wax.

108On the one hand, the effects of foreclosure would likely affect only a small part of competition in the downstream market and therefore would not confer an advantage on the new entity. On the other hand, foreclosure would involve a loss of revenue on the upstream slack wax market.

109Lastly, the applicant’s assertion, set out on 13 December 2022 and 5 January 2023, that the fear it had expressed that foreclosure of the slack wax market would materialise must, for reasons similar to those set out in paragraphs 69, 70 and 100 above, be regarded as being, in any event, irrelevant to the review of the lawfulness of the contested decision.

110In the light of all of those considerations, this plea, including all its various parts and complaints, must be dismissed.

2.The second plea in law, alleging an inadequate statement of reasons

111The applicant submits that the statement of reasons for the contested decision is inadequate, in particular as regards the definition of the relevant markets. It maintains that this plea is admissible, even if it was submitted at the reply stage in proceedings, since that decision had not yet been published on the date on which the action was brought.

112The Commission contends that this plea is inadmissible, since its submission at the reply stage is contrary to Article 84 of the Rules of Procedure and its late submission comes as a result of the applicant’s decision to bring the action prior to the publication of the contested decision. In any event, the Commission maintains that that decision contains a statement of reasons to the requisite legal standard.

113As a preliminary point, it must be observed that an inadequate or absent statement of reasons for a measure must be raised by the General Court of its own motion. The fact that an argument to that effect is submitted at a late stage in the proceedings by the applicant cannot alter the role of the EU Courts in that regard.

114According to Article 296 TFEU, legal acts adopted by EU institutions are to state the reasons on which they are based.

115In that regard, it must be recalled that the statement of reasons required under Article 296 TFEU must be appropriate to the measure at issue and must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted that measure, in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the competent court to exercise its power of review. Thus, the requirements to be satisfied by the statement of reasons depend on the circumstances of each case, in particular the content of the measure in question, the nature of the reasons given and the interest which the addressees of the measure, or other parties to whom it is of direct and individual concern, may have in obtaining explanations. It is not necessary for the reasoning to go into all the relevant facts and points of law, since the question whether the statement of reasons meets the requirements of Article 296 TFEU must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question (judgments of 2 April 1998, Commission v Sytraval and Brink’s France, C‑367/95 P, EU:C:1998:154, paragraph 63; of 22 June 2004, Portugal v Commission, C‑42/01, EU:C:2004:379, paragraph 66; and of 15 April 2008, Nuova Agricast, C‑390/06, EU:C:2008:224, paragraph 79).

116In the first place, it necessarily follows from the examination and rejection of the first plea that the Commission’s reasoning in paragraph 37 of the contested decision enabled the applicant to effectively defend its rights and the Court to exercise its power of review.

117In the second place, that conclusion applies in particular to what appears to be the applicant’s main criticism, namely the alleged inadequate explanation of the reasons which led the Commission not to favour a definition of the upstream market limited solely to slack wax produced and marketed in Poland.

118In that regard, it must be observed that the inclusion by the Commission of all slack wax marketed in Poland in its market definition merely constitutes the application of the criteria set out in the Notice on the definition of the relevant market, which forms part of the legal context of the contested decision. The applicant was therefore able to understand the reasons underpinning that decision, without the Commission being required to provide a more explicit statement of reasons in that regard.

119In the third place, and in any event, even if the contested decision were vitiated by an inadequate statement of reasons as regards the definition of the upstream market, that could not lead to the annulment of the contested decision.

120On the one hand, it must be observed that, in the light of the cumulative nature of the conditions necessary to determine the possibility of input market foreclosure, which was recalled in paragraph 88 above, each of the grounds set out in recitals 2004 and 2005 to the contested decision was such as to justify the Commission’s finding that it was not possible for the concentration to lead to foreclosure of access to slack wax.

121On the other hand, an inadequate statement of reasons for the definition of the upstream market affects only the ground claiming that the new entity lacks the ability to foreclose the market, in recital 2004 of the contested decision. It has no bearing on the ground claiming that that new entity would not have an incentive to foreclose the market, set out in recital 2005 of that decision. Indeed, that recital only contains assessments relating to the geographic dimension of the downstream market for paraffin waxes and the intensity of competition on that market.

122The second plea must therefore be dismissed and, consequently, the action must be dismissed in its entirety, without it being necessary to examine the applicant’s request made at the hearing, in essence and if the request for an expert’s report was not granted, for the Court to obtain from the Commission the evidence on the basis of which it established the grounds of the contested decision.

IV.Costs

123Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicant has been unsuccessful, it must be ordered to pay the costs, in accordance with the forms of order sought by the Commission and the intervener.

Operative part

On those grounds,THE GENERAL COURT (Third Chamber, Extended Composition)hereby:

1.Dismisses the action;

2.Orders Polwax S.A. to pay the costs.

Delivered in open court in Luxembourg on 14 June 2023.