(Exemption of restrictive agreements)


The Competition Council granted individual exemption to the agreement of DOLEZÁL Hungária Ipari Termelő és Kereskedelmi Kft (hereinafter DOLEZÁL) and Henkel Magyarország Kft (hereinafter Henkel).

The parties

DOLEZÁL imports and produces adhesives for industrial use for the shoe production. The major part of its activity is the supply of the products of its parent company, WICTOR. Although DOLEZÁL has no manufacturing capacity in Hungary but the two-third of its turnover is reached in the country through the supply of industrial adhesives mainly for shoe producers.

Henkel is a member of the chemical industry concern Henkel. Its main activity is the production, the import and the supply of cleaning agents and cosmetics. Compared to its overall turnover its income from industrial adhesives supply is insignificant.

The transaction

The parties` owners Wictor SpA and Henkel Loctite Adesivi srl concluded a framework-agreement which affected their affiliated firms in several countries and in Hungary as well.

The framework-agreement related to the shoe adhesives business of the Henkel group, including all related rights and interests. It did not affect however the ownership of the factories used for the production of the industrial adhesives, the ownership of the production lines, the trademarks and real-estates. Henkel, the seller undertook not to continue or take part in similar business activities for four years. The agreement did not relate to the production, import and supply of non-water and non-solvent based industrial adhesives.

Under Article 13 of this framework-agreement the affiliated firms concluded their agreement on the acquisition of property and notified it to the OEC. The transaction included the purchase of final products, raw materials, packaging and other materials used for the production of industrial adhesives and in addition DOLEZÁL acquired the right for 2001 to use on a wholesale level two Henkel trademarks.

The relevant market

Adhesives used for shoe production might be divided into two parts, water and solvent versus non-water and non-solvent based adhesives. The agreement affected only the latter products. The parties indicated that three other undertakings supplied such kinds of adhesives in Hungary but only Henkel produced industrial adhesives in the country. Industrial adhesives are purchased by shoe producers in big quantities, so the products are not present on the retail level. Import is free of duties and several shoe producer import industrial adhesives.

It can be seen that only the parties` commercial activities were covered by the agreement in Hungary but as the agreement will be carried out Henkel`s production would be stopped and Henkel would continue to produce other kinds of industrial adhesives through its manufacturing facilities.

The Council found that the relevant geographical market is the territory of Hungary.

Legal analysis

The Competition Act prohibits agreements among independent undertakings on the restriction of competition. Under the present agreement Henkel was obliged to hand over materials, business information and rights on trademark and, under the framework-agreement concluded by the parent companies, to restrain its business activity in relation with industrial shoe adhesives for four years. These conditions, as the Council found were suitable to restrict competition as Henkel would stop its production and these products would become unavailable for the customers so the number of the competitors on the market of industrial shoe adhesives would decrease.

The agreement does not qualify as an agreement of minor importance since the parties joint share on the relevant market is over 10 per cent.

However the Council established that the agreement fulfilled the conditions laid down in Article 17 of the Competition Act and therefore fitted for an individual exemption. The Council took into account that the transaction was part of an international concentration in which Wictor SpA acquired the whole industrial shoe adhesives business of the Henkel group through the framework-agreement. However the "Hungarian part" of this transaction does not qualify as a merger since DOLEZÁL purchases only final products, raw materials and other materials and knowledge necessary for the supply and these are not `part of an undertaking` as the Competition Act defines it.

The agreement contribute to a more reasonable organisation of production and distribution. Henkel, because of economic reasons, abandons the relevant market and concentrates its manufacturing capacity to the production of other kinds of industrial and non-industrial adhesives. This might be favourable for the consumers. DOLEZÁL will be able through the acquisition of know-how to improve the quality of the products and its commercial activity. The agreement is likely to allow a fair share of the resulting benefits for the consumers because DOLEZÁL is not in a dominant position and will not be there even after the transaction so the consumers may turn also to other suppliers.