Vj-131/1997/64

HOLLOW WARE OROSHÁZA / GLASSWORKS SAJÓSZENTPÉTER

Both Hollow Ware Orosháza (sole owner: Owens Illinois Hungary Inc.) and Glassworks Sajószentpéter (17 domestic owners with no means for the necessary modernization or renewal of the factory) manufactured and distributed, to an extent of 90 per cent for domestic users, preserve jars and white and green bottles with a capacity utilization of about 50 per cent. They applied for the authorization of a concentration where Hollow Ware Orosháza would purchase the hollow ware manufacturing (assets, properties and business) of Glassworks Sajószentpéter.

There is only very limited substitutability at the users of hollow ware. Therefore the (domestic) market of hollow ware was deemed by the Competition Council to be the relevant market. On this market Hollow Ware Orosháza and Glassworks Sajószentpéter had a joint market share in 1997 of 67 per cent. At the same time the market share of the imported goods, after a 120 per cent increase in value in comparison with the year 1995, reached 29 per cent. There was a high rise in competitiveness of hollow ware imports, coming mainly from the neighbouring countries, as a result of a decrease in the customs duty, charges, fees and an additional duty, which amounted altogether to a total of 19, 8 per cent in early 1995, to the zero level by 1 July 1997.

The Competition Act defines dominant positions by the ability of undertakings to pursue their business activities to a great extent independently of the reactions of their market partners. "The Office of Economic Competition may not refuse the authorization of a concentration if ......... it does not create or strengthen a dominant position ........ on the relevant market ........." (Art. 22(2) and 30(2) of the Act, respectively).

In the case concerned the value of HHI in 1997 was 3156 and would have been after carrying out the concentration at issue (taken the joint share of imports as that of one market participant) 5340. The competitiveness of the Hungarian hollow ware production would, however, improve through structural streamlining, economic rationalisation and the exploitation of economies-of-scale possibilities and the efficient competition would be sustained. "Even the possibility for the users to get competitive imports puts the undertaking" [i. e. Hollow Ware Orosháza] "under pressure to take into account the reactions and interests of their market partners when deciding its market conduct" - the Competition Council stated and authorized the concentration.

January 22, 1998. Budapest

dr. Bodócsi András sk. előadó
Fógel Jánosné dr. sk.
dr. Sólyom Eszter sk.
Ágoston Marika