COMMISSION DECISION of 25/05/1999 declaring a concentration to be compatible with the common market (Case No IV/M.1491 - ROBERT BOSCH / MAGNETI MARELLI) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

Brussels, 25.05.1999.

To the notifying parties

Dear Sirs,

Subject : Case No IV/M. 1491 - Robert Bosch / Magneti Marelli Notification of 19 April 1999 pursuant to Article 4 of Council Regulation No 4064/89

1. On 19 April 1999, the Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EEC) No 4064/89, as amended by Council Regulation (EEC) No 1310/97 ("Merger Regulation"), by which Robert Bosch GmbH ("Bosch") and Magneti Marelli S.p.A. each acquire 50% of a newly created joint venture on automotive lighting technology ("JV").

2. After examination of the notification, the Commission has concluded that the notified operation falls within the scope of Council Regulation No 4064/89 and does not raise serious doubts as to its compatibility with the common market and the functioning of the EEA agreement.

I. THE PARTIES

3. Bosch develops, manufactures and markets products in the field of automotive equipment and communication technology, consumer goods and manufactured products (industrial equipment, packaging machines, hydraulic equipment, pneumatic equipment and plastic as well as metal products).

4. Magneti Marelli, which is controlled by Fiat S.p.A, is active in the field of automotive equipment. The Fiat Group is active in the production and marketing of cars, trucks, agricultural machinery and earth-moving machinery, plane engines, train material, vehicle components, robotic devices and insurance services.

II. THE OPERATION

5. Bosch and Magneti Marelli will each acquire 50% of the shares in the JV and will contribute their world-wide activities in automotive lighting to the JV. The JV will also be the holding company for further companies to be set up by the parties.

III. CONCENTRATION

JOINT CONTROL

6. Each of Bosch and Magneti Marelli will hold 50% of the shares in the JV. The JV will be managed by the Managing Board and controlled and supervised by the Shareholder Delegation and the Shareholder Meeting, Each of the parties will appoint half of the members of these bodies. Therefore the JV will be jointly controlled by its parent companies.

AUTONOMOUS FULL FUNCTION UNDERTAKING

7. The JV will develop, produce and market main headlamps (including washing systems and levelling controls), auxiliary front lamps, rear lamps, auxiliary rear lamps and levelling controls. The products manufactured by the JV will be handled by the JV itself with regard to the Original Equipment Manufacturers (OEM) and the Original Equipment Spare Parts' (OES) business. As to the Independent After Market (IAM) the products will be distributed through the parties' own distribution networks. The JV will therefore perform on a lasting basis all the functions of an autonomous economic entity.

IV. COMMUNITY DIMENSION

8. The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 billion (1). Each of them have a Community-wide turnover in excess of EUR 250 million, and they do not achieve more than two-thirds of their aggregate Community-wide turnover within one and the same Member State. The notified operation therefore has a Community dimension within the meaning of Article 1(2) of the Merger Regulation.

(1) Turnover calculated in accordance with Article 5(1) of the Merger Regulation and the Commission Notice on the calculation of turnover (OJ C66, 2.3.1998, p. 25). To the extent that figures include turnover for the period before 1.1.1999, they are calculated on the basis of average ECU exchange rates and translated into EUR on a one-for-one basis.

V. COMPETITIVE ASSESSMENT

Relevant product markets

9. In conformity with previous Commission decisions a distinction has to be made between products asked for by the OEM/OES and by the IAM. According to the parties the operation gives rise to 4 horizontally affected markets : main headlamps for the OEM/OES and for the IAM and auxiliary front lamps for the OEM/OES and for the IAM. The market for levelling controls (which are part of the main head lamp) will be vertically affected by this operation.

10. The parties are of the opinion that in all product markets there is no distinction to be made between products sold for use in cars and products sold for use in trucks. Although the electrical system for heavy vehicles (above 7,5 tons) is often 24 volt driven whereas light vehicles are equipped with a 12 volt system, the construction and the function of the lamps are identical for both groups of products and most competitors (Valeo, Hella, Zizala Lichtsysteme (ZKW) produce main headlamps and auxiliary front lamps for heavy and light vehicles. The car and truck manufacturers therefore choose among the same supply sources.

11. The market investigation has shown that the volume of main headlamps and auxiliary front lamps for light vehicles is 9 times as big as the volume of these products for heavy vehicles. Despite the difference in volume of both segments, the same technology is used by the same producers to manufacture these products for light and heavy vehicles. There is therefore supply-side substitutability. Since main headlamps and auxiliary front lamps are developed in close co-operation with the car and truck manufacturers, there is no need to further sub-divide the market and to distinguish between main headlamps and auxiliary front lamps for light and for heavy vehicles.

(1) Main headlamps for OEM/OES

12. Main headlamps are only sold as units. These units consist of low beam and high beam light sources that are mounted in series by the car and truck manufacturers. Main headlamps are sold with levelling controls either with or without washing system to clean the lens (washing systems are only sold together with the respective headlamp).

(2) Auxiliary front lamps for OEM/OES

13. The most prominent lamps serving auxiliary functions to the main headlamps are fog lamps and spot lamps. Fog lamps are intended to improve road-surface illumination in fog, snow, heavy rain and dust. Spot lamps generate a narrow beam of light with high luminous intensity, enabling the user to illuminate a small area from a substantial distance.

(3) Main headlamps for the IAM and (4) auxiliary front lamps for the IAM

14. The main headlamps and auxiliary front lamps sold to the IAM do not differ from the products sold to the OEM/OES. However, as the products are sold to different customers, they have to be considered as a separate product market in accordance with previous Commission decisions.

(5) Levelling controls

15. Levelling controls are part of the main headlamp and assure that the light beam's inclination will remain within the dedicated tolerances such that oncoming traffic is not dazzled. Demand for levelling controls only stems from main headlamp producers.

Relevant geographic markets

16. According to the parties the relevant geographic market for the product groups delivered to the OEM/OES is at least the EEA (low transport costs, international purchasing of car and truck manufacturers), which is in line with previous Commission decisions (2). This view was confirmed by the market investigation.

(2) E.g. Case N IV/M. 768 - Lucas/Variety dd. 11/0/1996, Case N IV/M. 1245 - Valeo/ITT Industries.

17. With regard to the products delivered to the IAM, the parties are of the opinion that the relevant geographic market is as well the EEA. In some previous cases on automotive spare parts the Commission has shown a tendency to consider the relevant geographic markets to be national ones, although in other cases the Commission indicated that it would not necessarily attribute a narrower than an EEA-wide range to markets for automotive spare parts.

18. The market investigation provided some indications that the IAM markets for main head lamps and auxiliary front lamps are national (different market shares in the various EEA States, national distribution chains). However, for the purpose of the present case the definition of the relevant geographic market for the IAM products can be left open since in all alternative definitions considered above, the operation will not lead to the creation or strengthening of a dominant position.

Assessment

19. The market share figures indicated in the following paragraphs are based on the data submitted by the parties. The investigation of the Commission has confirmed these estimates to a large extent.

Single dominance

(1) Main headlamps for the OEM/OES

20. According to the information provided by the parties the JV would obtain an EEA-wide market share of [20%-30%] (Bosch [10%-20%], Magneti Marelli [