Mergers: Commission approves D'Ieteren's acquisition of PHE, subject to conditions

The European Commission has approved, under the EU Merger Regulation, D'Ieteren's acquisition of PHE. The approval is conditional on full compliance with commitments offered by D'Ieteren.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “More than 90% of French motorists buy glass breakage insurance, and more than 3 million windshields are repaired each year. Lack of competition on this market could therefore result in higher insurance premiums for all consumers. D'Ieteren and PHE are both leading providers of vehicle glass repair and replacement services in France. With the divestments approved today, the parties will be able to bring together their activities in the automobile repair and spare parts sectors, while ensuring that the transaction will not have a harmful impact on French motorists.”

D'Ieteren is active, through its subsidiary Belron, in the repair and replacement of vehicle glass in a number of Member States, including in France. The brands of workshops under its control include Carglass, Safelite and Autoglass. PHE is active in the repair of vehicle glass in France, through a network of workshops under the brand Mondial Pare-Brise and through the Glass Auto Service label.

The Commission's investigation

Given Carglass's leading position in the French market for the provision of vehicle glass repair and replacement services, the Commission had concerns that the transaction would have reduced competition in vehicle glass repair and replacement services in France.

Since the majority of car owners in France are insured for vehicle glass damages, insurance companies account for approximately 80-90% of the demand for vehicle glass repair and replacement. They usually also bear almost the entire cost of the repair. Therefore, insurance companies aim at subscribing framework agreements with networks of specialised glass repairers, in order to offer a comprehensive choice of repairers to their customers across the French territory and to negotiate the price of the repair.

The Commission's investigation showed that:

• The transaction would have resulted in an entity combining the market leader and an unavoidable trading partner for many insurers (Carglass) with its closest competitor (Mondial Pare-Brise) and another close competitor (Glass Auto Service). Carglass already carries out three times as many vehicle glass repair jobs as the next largest competitor. It also stands out from competing networks in having a strong brand image, recognised by most consumers.
• For these reasons, post-transaction, insurers would not be able to redirect a significant portion of their business to other specialist networks, different from the ones involved in the transaction.
• Furthermore, this market is characterised by high barriers to entry, due to the time and expense needed to develop a nationwide network.

The proposed remedies

To address the Commission's competition concerns, D'Ieteren offered to divest Mondial Pare-Brise and the Glass Auto Service label in their entirety.

These commitments fully remove the overlap between D'Ieteren and PHE's vehicle glass repair and replacement services activities in France.

Following the market test, the Commission therefore concluded that the transaction, as modified by the commitments, would no longer raise competition concerns. The decision is conditional upon full compliance with the commitments. 

Background

D'Ieteren, based in Belgium, through its jointly controlled subsidiary Belron, provides vehicle glass repair and replacement services under several brands, including Carglass, Safelite and Autoglass, in several EU Member States, including in France and in other countries around the world. D'Ieteren Automotive is the official importer and distributor of the Volkswagen brands in Belgium. It also manages a network of dealerships in Belgium and operates dealerships between Brussels and Antwerp, as well as the Wondercar franchise, a network of bodywork repair shops, in Belgium.

PHE, based in France, provides vehicle glass repair and replacement services in France, through a network of workshops under the brand Mondial Pare-Brise, which are either wholly owned by PHE or franchises. PHE also owns Glass Auto Service, which is a network of independent garages with vehicle glass repair and replacement services. PHE is also active in the independent distribution of spare parts for motor vehicles in several EU Member States, primarily in France and, to a lesser extent, in Belgium, the Netherlands, Italy and Spain. PHE also provides services and business support to independent garages which operate under one of PHE's brands (e.g. 1,2,3 Autoservice, AD, Autoprimo, Staff Auto in France, or 1,2,3 Autoservice, Requal and AD Expert in Belgium).

Merger control rules

The transaction was notified to the Commission on 13 June 2022.

The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.

The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II). If commitments are proposed in Phase I, the Commission has 10 additional working days, bringing the total duration of a Phase I case to 35 working days, such as in this case.

More information on this case is available on the Commission's competition website, in the public case register under the case number M.10687.