This presentation by Romania was prepared for the break-out Session 1, “Quantitative Evidence”, in the discussion “Economic Analysis in Merger Investigations” at the 19th OECD Global Forum on Competition on 9 December 2020. More papers and presentations on the topic can be found at http://oe.cd/eami. This presentation was uploaded with the author’s consent.

1. The Quantitative Analysis Conducted in
Two (Relatively) Recent Mergers
Radu A. Păun, PhD
Director, Industry and Energy Department
radu.paun@competition.ro

2. Merger 1 – Wienerberger planning to acquire Brikston
Key facts:
- Merger notified in Oct. 2017
- Both parties are producers of bricks, ceramic blocks, apparent bricks, roof tiles etc.
- Ceramic blocks make the most of the companies’ turnover, focus on this product
Ceramic blocks
Apparent bricks
(Full) Bricks

3. Merger 2 – Xella planning to acquire Macon
Key facts:
- Merger notified in Jan. 2018
- Both parties are producers of AAC (Autoclaved Aerated Concrete) and a few other products
- AAC makes the most of the companies’ turnover, focus on this product

4. The debate over the relevant product market definition
Option 1 (parties’ view):
AAC and ceramic blocks are part of a wider market (a market for construction materials),
which includes AAC, ceramic blocks, full bricks, concrete blocks (including home-made), as
well as other construction materials (wood, stone and such). Parties are also OK with a market
definition which only includes AAC and ceramic blocks.
Option 2:
AAC and ceramic blocks are not part of the same relevant product market.
The main argument in favor
of Option 1: Many buildings
in Romania are constructed
using a structure with frames
(pillars, beams, and slabs
made of reinforced concrete),
walls are not load-bearing,
they can be made either of
AAC or ceramic blocks.
Parties claimed that some technical
features of AAC and ceramic blocks
are similar and also that prices of
built walls are similar.

5. Additional elements:
- Agreement between RCC and the parties on geographical market size (national).
- Apparently no consensus at EU level on relevant product market definition.
- In older cases (2007, 2008), RCC has seen AAC and ceramic blocks to be different.
2017 Market shares
Blocks AAC
Wienerberger 19%
Brikston 8%
Cemacon 11%
Siceram 5%
Soceram 4% 1%
Euro Poroton 2%
Macofil 2%
Imports 0%
Xella 5%
Macon 11%
Celco 8%
Prefab 7%
Elpreco 7%
Somaco 5%
Prefab Vest 4 3%
Imports 1%
Total 100%
Option 1 (parties’ view):
Wienerberger + Brikston=27%
Xella + Macon = 16%
AAC Market shares
Xella 11%
Macon 23%
Celco 16%
Prefab 14%
Elpreco 14%
Somaco 10%
Prefab Vest 4 7%
Soceram 3%
Imports 3%
Blocks Market shares
Wienerberger 36%
Brikston 16%
Cemacon 21%
Siceram 9%
Soceram 7%
Euro Poroton 5%
Macofil 4%
Others 1%
Imports 1%
Option 2:
Wienerberger + Brikston=52%
Xella + Macon = 34%

6. What we have found:
- Some features of AAC and ceramic blocks are actually different (higher density of ceramic
blocks, up to 68%, higher compression resistance for ceramic blocks, up to 28%, higher
thermal insulation for AAC, up to 41%).
- Higher prices for walls built of ceramic blocks, up to 55%.
- Some buildings don’t use a frames structure, so ceramic blocks are strongly preferred.
- Independent study showing that end-users and construction companies generally prefer
ceramic blocks over AAC.
- Mixed answers from parties’ competitors, resellers and construction engineers.
All in all, more evidence in favour of Option 2 (different markets) than Option 1 (one market).
Parties continued to claim AAC and ceramic blocks are substitutes, so we went further:
- Prices and quantities collected from all AAC and blocks producers (luckily not so many)
- Monthly average data for a 4-year period (2014-2017), 48 data points
- 3 size categories selected for AAC: 24-25cm (most sales), 29-30cm, 10-12.5cm
- 3 size categories selected for ceramic blocks: 24-25cm (most sales), 29-30cm, 11.5-12cm

7. Shock analysis
100
120
140
160
180
200
220
AAC 24-25 AAC 29-30 AAC 10-12.5 Ceramic 24-25 Ceramic 29-30 Ceramic 11.5-12
- Just one shock identified visually: Nov. 2014, AAC 10-12.5cm
- Sales did not change much during that period, neither for AAC 10-12.5cm, nor for its
potential competing product, ceramic blocks 11.5-12cm

8. Price correlation analysis
- Rather low linear correlation coefficients when using simultaneous prices
- Similar results with lagged data (-2 months, -1 month, +1 month, +2 months)
AAC
24-25cm
AAC
29-30cm
AAC
10-12.5cm
Ceramic
24-25cm
Ceramic
29-30cm
Ceramic
11.5-12cm
AAC 24-25cm 1 0.432 0.070 0.348 0.240 0.360
AAC 29-30cm 1 0.372 0.415 0.317 0.395
AAC 10-12.5cm 1 0.365 -0.011 0.224
Ceramic 24-25cm 1 0.720 0.827
Ceramic 29-30cm 1 0.771
Ceramic 11.5-12cm 1

9. Relative price stationarity analysis
- Only one relative price data series was found to be stationary by the ADF test
No conclusive quantitative evidence in favour of AAC and ceramic blocks being
substitutes in Romania → we had to treat them as different.
0.80
0.85
0.90
0.95
1.00
1.05
1.10
1.15
Jan-14
Mar-14
May-14
Jul-14
Sep-14
Nov-14
Jan-15
Mar-15
May-15
Jul-15
Sep-15
Nov-15
Jan-16
Mar-16
May-16
Jul-16
Sep-16
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
AAC 24-25cm/Ceramic blocks 24-25cm
0.80
0.85
0.90
0.95
1.00
1.05
1.10
1.15
Jan-14
Mar-14
May-14
Jul-14
Sep-14
Nov-14
Jan-15
Mar-15
May-15
Jul-15
Sep-15
Nov-15
Jan-16
Mar-16
May-16
Jul-16
Sep-16
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
AAC 24-25cm/Ceramic blocks 29-30cm
0.90
1.00
1.10
1.20
1.30
1.40
Jan-14
Mar-14
May-14
Jul-14
Sep-14
Nov-14
Jan-15
Mar-15
May-15
Jul-15
Sep-15
Nov-15
Jan-16
Mar-16
May-16
Jul-16
Sep-16
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
AAC 29-30cm/Ceramic blocks 24-25cm
0.90
1.00
1.10
1.20
1.30
1.40
1.50
1.60
Jan-14
Mar-14
May-14
Jul-14
Sep-14
Nov-14
Jan-15
Mar-15
May-15
Jul-15
Sep-15
Nov-15
Jan-16
Mar-16
May-16
Jul-16
Sep-16
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
AAC 29-30cm/Ceramic blocks 29-30cm
0.60
0.70
0.80
0.90
1.00
1.10
1.20
Jan-14
Mar-14
May-14
Jul-14
Sep-14
Nov-14
Jan-15
Mar-15
May-15
Jul-15
Sep-15
Nov-15
Jan-16
Mar-16
May-16
Jul-16
Sep-16
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
AAC 10-12.5cm/Ceramic blocks 11.5-12cm

10. Merger 1 – Wienerberger planning to acquire Brikston
Blocks Market shares
Wienerberger 36%
Brikston 16%
Cemacon 21%
Siceram 9%
Soceram 7%
Euro Poroton 5%
Macofil 4%
Others 1%
Imports 1%
Our worries:
- Wienerberger and Brikston are strong and relatively close competitors
- The merger would lead to a dominant position on the market
- The next competitor (Cemacon) would be much further away from the
new entity (31pp gap), the rest of the competitors are small, 4-9%
Unilateral effects analysis:
- Conducted with the help of our Chief Economist Unit
- Parties did not demonstrate any tangible efficiency gains and consumer
benefits stemming from this merger → GUPPI
- Parties could profitably increase prices after the merger for 11.5-12cm
and 29-30cm ceramic blocks, which make about 60% of their sales
Parties have proposed remedies, RCC has rejected them.
July 2018 – RCC was on the point to block the merger, but did not get to do this, as parties have
abandoned the deal.
Dec. 2018 – Brikston was acquired by Leier (another Austrian player,
with no production facility in Romania) → the structure of the ceramic
blocks market in Romania has remained at least as good as before.

11. Merger 2 – Xella planning to acquire Macon
AAC Market shares
Xella 11%
Macon 23%
Celco 16%
Prefab 14%
Elpreco 14%
Somaco 10%
Prefab Vest 4 7%
Soceram 3%
Imports 3%
Coordinated effects analysis. Some of the factors considered:
Risk of collusion following the merger considered limited → merger cleared in April 2018
- Barriers to enter the market
- Market transparency
- Symmetry of market shares
- Stability of market shares
- Number of competitors
- Symmetry of competitors’ costs
- Product homogeneity
- Buyer negotiation power
- Market concentration
- Structural links between competitors
- Marketing and communication efforts

12. Thank you for your attention!
radu.paun@competition.ro