BRUSSELS (March 7, 2003) — The European Union Commission has cleared Group Michelin's takeover of Viborg Gruppen Holding's tire distribution and retreading business, saying Michelin's purchase of the 465-outlet network “does not give rise to serious competition concerns given the significant presence of other large replacement tire distributors and retreaders, as well as unaffiliated retailers.”
Michelin disclosed in January it had bid $305 million for the tire retailing activities of Denmark's Viborg and planned to integrate the business with its own Euromaster retail distribution network. The Viborg generated sales of $510 million in 2001 and operates outlets in Austria, Denmark, Germany, The Netherlands and Switzerland. Euromaster has 1,200 outlets and reported sales of $1.3 billion in 2001.
The Commission said its review showed the tire distribution markets across Europe are competitive as increasingly sophisticated fleet owners try to obtain the best offer at the lowest price. Some competitors expressed concerns that Euromaster could increase sales in national markets through the strengthening of its European network. But this was not confirmed by the Commission´s market investigation as customers purchase the vast majority of their replacement tires close to where their fleet is based.
Competitors also voiced concerns that the strengthening of Michelin´s distribution activities would allow it to limit competing tire brands from access to the market. However, the market investigation confirmed that customers require distributors to maintain an independent multi-branding strategy and concluded that Euromaster would lose significantly more business by excluding Michelin´s competitors from access to its distribution than Michelin could gain by pushing its own brands.
For retreaded tires, the new entity will strengthen its position in Austria, Denmark, Germany and Sweden, but will continue to face competition from retreaders such as those allied with Bandag Inc., Gummiwerk Kraiburg and Marangoni S.p.A., which have similar or higher market shares in the markets concerned.
A combined Euromaster-Viborg will have a share of about 13 percent of the European truck tire replacement market and 8 percent for passenger tires, Michelin said earlier.