Bundeskartellamt prohibits acquisition of Ziemann by Loomis

The Bundeskartellamt has prohibited the acquisition of all shares of Germany’s second-largest cash handling service, Schallstadt-based Ziemann Sicherheit Holding GmbH, by Loomis AB, an internationally active Swedish cash handling service.

Andreas Mundt, President of the Bundeskartellamt: “The merger project would have considerably impeded effective competition in several very concentrated regional markets for cash handling services. After the merger, Loomis/Ziemann and Germany’s market leader Prosegur would have basically been the only two companies active on the affected markets. Due to the reduction of the number of key competitors from three to two, there would have been a risk of higher costs for direct customers of these services, mostly in the areas of trade and banking, which would have indirectly resulted in higher costs for all consumers. The commitments offered by the companies were not suitable to eliminate the competition concerns."

The stock-exchange listed Loomis Group is headquartered in Sweden and active in the areas of cash handling, valuables logistics and trade in precious metals and foreign notes and coin. The group has more than 400 subsidiaries in over 20 countries. Loomis entered the German market only in 2018 when it acquired the cash handling services division of security services provider Kötter. The company offers cash handling services in the west and north of Germany and is one of the three leading providers in these regions.

Ziemann ranks second after market leader Prosegur in cash handling services in Germany. The company is active in the north, west and south of Germany and in Berlin.

The merger project mostly affects the provision of cash for businesses and banks. It includes the transport of coins and banknotes to and from customers, cash processing in a Cash Center and the refilling and maintenance of ATMs, which is commissioned by banks.

Prosegur is basically the only other company active on the regional markets for cash handling services affected by the merger in Cologne, Bochum, Bielefeld/Münster, Bremen and Koblenz. The parties to the merger and Prosegur together have a market share of approximately 80 percent in the affected regions. After the merger the market leaders would have stronger incentives to increase prices or change other terms and conditions of their offer, e.g. their service, for the worse without a significant alternative being available to their customers. The other competitors are regionally active small or medium-sized companies with comparatively low market shares. The Bundeskartellamt’s investigations have shown that the competitive potential of the remaining competitors will not be sufficient to limit the scope of action of the merged company Loomis/Ziemann and Prosegur.

In July 2019 the Bundeskartellamt notified the parties to the merger that it takes a critical view of the merger project. Loomis and Ziemann offered commitments in response to the Bundeskartellamt’s statement of objections which involved selling customer contracts and the pertaining infrastructure in the respective regional markets. While the volume of these customer contracts would have balanced the growth resulting from the acquisition to a large extent, it was not sufficiently likely that a sufficient number of affected customers would switch to the respective prospective buyers. Market tests showed that customers and competitors had a critical view of the commitments undertaken and confirmed the Bundeskartellamt’s concerns. Their statements raised the concern that a significant part of the surveyed customers would generally not be willing to switch to another cash handling service. Many of those customers generally willing to switch their service provider said they would switch at most to market leader Prosegur. However, the Bundeskartellamt assessed that customers switching to Prosegur would be just as detrimental for competition. The merger project had to be prohibited as a result.