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Both companies are particularly active in the sector of line drainage. The term line drainage refers to surface draining (e.g. roads, public squares, private and commercial properties) where drainage channels collect surface water and conduct it to the sewage system.
Within the context of its examination proceedings the Bundeskartellamt surveyed more than 200 competitors, contracting entities and traders of building materials. It was found that buyers specifically search for line drainage systems for their construction projects and do not consider other surface draining systems (such as open drainage channels without cover, e.g. concrete drainage channels, point drainage systems, eco-friendly paving or concrete grass paving systems) to be equivalent alternatives.
This is mainly due to technical reasons (e.g. performance of drainage systems), economic reasons or design considerations. Due to this very specific demand the Bundeskartellamt has not based its decision on the assumption of an “overall market for surface drainageâ€, but considers the separate assessment of the market for line drainage to be appropriate.
In 2020, the market volume in the German line drainage sector was almost 200 million euros.
ACO and BIRCO achieve joint market shares of 45-50 per cent and would thus have a dominant position. As a joint economic entity they would almost be three times the size of the second-largest player in the market, Hauraton. Other competitors such as Richard Brink, ANRIN, Rinninger or MEA are even significantly smaller, and foreign suppliers only have marginal shares in the German market.
Even if open drainage channels were included in the market, the joint ACO-BIRCO market share would still exceed 40 per cent.
By joining forces ACO and BIRCO would be able to have superior access to contracting entities and traders of building materials to the detriment of their competitors. Both companies are already very well positioned in terms of sales activities which they would have been able to intensify post merger (for example by expanding their product portfolio which covers various types of materials and special types of drainage channels).
There was also the risk that the companies’ competitors might be less successful in future tender procedures or could be squeezed out of the building materials trade. The authority’s decision can be expected to ensure that ACO’s and BIRCO’s scope of action will continue to be curbed by competition. ■