The Yokohama Rubber Co., Ltd / Trelleborg Wheels Systems Holding AB merger inquiry
| Decision Date | 31 January 2023 |
| Date | 31 January 2023 |
| Subject Matter | Mergers |
| Court | Competition and Markets Authority (EW) |
Anticipated acquisition by The
Yokohama Rubber Co., Ltd, of
Trelleborg Wheel Systems Holding AB
Decision on relevant merger situation and substantial
lessening of competition
ME/7014/22
The CMA’s decision on reference under section 22(1) of the Enterprise Act 2002 given
on 28 March 2023. Full text of the decision published on 4 May 2023.
Please note that [] indicates figures or text which have been deleted at the request of
third parties for reasons of commercial confidentiality. In addition, figures may have also
been replaced in ranges as a way to protect commercial confidentiality.
SUMMARY
1. The Competition and Markets Authority (CMA) has found that The Yokohama
Rubber Co., Ltd (YRC)’s acquisition of Trelleborg Wheels Systems (TWS) (the
Merger) does not give rise to a substantial lessening of competition (SLC) in the
supply of off-highway tyres (OHT). YRC and TWS are together referred to as the
Parties, and for statements related to the future, the Merged Entity.
2. YRC and TWS each supply OHT for various end uses (eg agriculture,
construction) to original equipment manufacturers (OEMs) who sell tractors and
industrial vehicles for use in sectors such as agriculture, forestry and construction.
3. The CMA assessed the potential impact of the Merger on the supply of OHT
directly to OEMs in the EEA and UK in each of the following usage categories: (i)
Agricultural – Traction Drive (TD Agri) (eg traction drive tyres for tractors); (ii)
Agricultural – Fronts and Implements (Fronts and Implements) (eg tyres for
agricultural machinery that can be attached to tractors); (iii) Agricultural – Forestry
(Forestry) (eg tyres for vehicles including skidders, forwarders and harvesters)
and (iv) Construction (eg tyres for excavators).
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4. The CMA has found that the Merger will not lead to competition concerns in
respect of the supply of any of these categories of OHTs directly to OEMs in the
EEA and UK for the following reasons:
(a) In the supply of TD Agri tyres, the CMA considers that the Merger leads to a
modest increment in shares of supply of [0-5]%. The CMA also considers that
while the Parties exert some competitive constraint on one another, they are
not each other’s closest competitors. Additionally, the Merged Entity will face a
material constraint from alternative suppliers including Michelin, BKT and
Bridgestone.
(b) In the supply of Fronts and Implements tyres, the CMA considers that the
Merger leads to a modest increment in shares of supply of [0-5]% and that the
Parties’ combined share of supply is [20-30]%. The CMA also considers that
while the Parties exert some competitive constraint on one another, they are
not each other’s closest competitors. Additionally, the Merged Entity is likely to
face a material constraint from BKT, which has a larger share of supply than
the Merged Entity, and from Vredestein, TVS and CEAT which each have
larger or similar shares of supply to YRC.
(c) In the supply of Forestry tyres, the CMA considers that the Parties have a
combined share of supply of only [5-10]%, and that the Merger leads to a
modest increment of [0-5]%. The CMA also considers that while the Parties
exert some competitive constraint on one another, they are not each other’s
closest competitors. Additionally, the Merged Entity will face a material
constraint from Nokian and BKT, each of which have a larger share of supply
than the Merged Entity.
(d) In the supply of Construction tyres, the CMA considers that the Parties have a
combined share of supply of [20-30]% and that the Merger leads to an
increment in shares of supply of [5-10]%. The CMA also considers that while
the Parties exert some competitive constraint on one another, they are not
each other’s closest competitors. Additionally, the Merged Entity will face a
material constraint from Michelin, which has a larger share of supply than the
Merged Entity, as well as from BKT and Bridgestone, which each have larger
or similar shares of supply to YRC.
5. The CMA believes that these constraints, taken together, are sufficient to ensure
that the Merger does not give rise to a realistic prospect of a SLC in the UK as a
result of horizontal unilateral effects in relation to the supply directly to OEMs of
TD Agri, Fronts and Implements, Forestry and Construction tyres in the EEA and
UK.
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