COMMISSION DECISION of 26/10/2000 declaring a concentration to be compatible with the common market (Case No IV/M.2102 - MAGNETI MARELLI/MAGNETI MARELLI AUTOMOTIVE LIGHTING BUSINESS JV) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

Brussels, 26.10.2000

SG(2000)D/107944

To the notifying party

Dear Sir/Madam,

Subject : Case No COMP/M. 2102 - Magneti Marelli/MM Automotive Lighting Business JV Notification of 25 September 2000 pursuant to Article 4 of Council Regulation No 4064/89 [1] (hereafter "the Merger Regulation")

[1] OJ L 395, 30.12.89 p.1; corrigendum OJ L 257 of 21.09.90, p.13; Regulation as last amended by Regulation (EC) No 1310/97 (OJ L 180, 09.07.97, p.1, corrigendum OJ L 40, 13.02.98, p.17).

1. On 25 September 2000, the Commission received notification of a proposed concentration by which the Italian undertaking Magneti Marelli (MM) will acquire sole control of MM Automotive Lighting Business (MALB), a joint venture previously constituted by MM and Robert Bosch GmbH (BOSCH).

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

I. the parties

3. MM is an Italian undertaking fully controlled by Fiat S.p.a. MM is active in the development and manufacture of automotive equipment, including power-train systems, onboard instrumentation, driving support systems, lighting, traction control systems and electromechanical components.

MM Automotive Lighting Business (MALB) is a joint venture constituted by MM and Robert Bosch GmbH (BOSCH) in May 1999. MALB develops, produces and markets main headlamps (including washing systems and levelling controls), auxiliary front lamps, rear lamps, auxiliary rear lamps and levelling controls.

II. THE CONCENTRATION

4. The parties have entered into a restructuring agreement according to which MM will contribute all of its shares of its controlled undertaking Seima Italiana S.p.a. (SEIMA) to MALB. This contribution will determine a capital increase of MALB whereby MM's shareholding will raise from 50% to 75% and BOSCH' will decrease from 50% to 25%. BOSCH' minority interest will not be furnished with any additional voting rights that would establish a situation of joint control. As a result of the operation MM will thus move from joint control to sole control of MALB. Consequently, the notified operation constitutes a concentration within the meaning of Art. 3(1) b of the Merger Regulation.

III. COMMUNITY DIMENSION

5. The combined aggregate world-wide turnover in 1999 of the undertakings concerned exceeds EUR 5,000 million (MM, EUR 4,062 million, FIAT, EUR 48,123 million, MALB EUR 730,433 million). The Community-wide turnover of both MM and MALB exceeds EUR 250 million (MM EUR 3,060 million, MALB EUR 566,211 million). Neither MM nor MALB achieve more than two-thirds of their aggregate Community-wide turnover within one and the same Member State. Therefore, the concentration falls within the scope of the Merger Regulation.

IV. COMPETITIVE ASSESSMENT

6. The notified transaction represents a further development of two operations completed by MM in recent times: a) the establishment of MALB in conjunction with BOSCH for the design, developing, manufacture, marketing and sale of automotive lighting equipment (Case IV/M.1491 Robert Bosch/Magneti Marelli of May 25, 1999); b) MM's acquisition of sole control over SEIMA, a company active in the automotive lighting equipment (Case COMP/M.1929- Magneti Marelli/SEIMA of May 29, 2000). Both operations regarded the sector of automotive lighting equipment, although different markets, and in both circumstances the Commission found no competition concerns.

Relevant product and geographic markets

7. The present operation also concerns the sector of automotive lighting equipment and in particular the markets for rear lamps and for auxiliary rear lamps ("third stop") for passenger cars. These latter products consist of break lights integrated in a high position of the rear and middle of a passenger car in order to enhance the warning signal given to the following traffic. In the previous decision on the case Magneti Marelli/SEIMA the Commission found that in the market for rear lamps and auxiliary rear lamps a further segmentation can be envisaged with regard to products for light and heavy vehicles (cars and trucks). However, since neither of the parties to the present operation sells rear lighting equipment for trucks, the exact definition of this product market can be left open.

8. A distinction must instead be made depending on the different market players who may purchase rear lamps and auxiliary rear lamps. These products are in fact sold either to original equipment manufacturers (OEM/OES) and/or to the independent after market (IAM). In the decisions cited above, the Commission found that the OEM/OES and the IAM belong to two distinct product markets.

9. However, for the purposes of this decision, it is not necessary to further delineate the relevant product markets in the above sectors, as in all alternative market definitions considered, effective competition would not be significantly impeded in the EEA or in any substantive part of it.

10. The relevant geographic market for product groups delivered to the OEM/OES is at least the EEA, whilst it still appears that the market for IAM is national (see again Case COMP/M.1929-Magneti Marelli/SEIMA).

11. However, for the purposes of this decision, it is not necessary to further delineate the relevant geographic markets in the above sectors, as in all alternative market definitions considered, effective competition would not be significantly impeded in the EEA or in any substantive part of it.

Assessment

12. If the parties to the present concentration were considered as different legal entities, their activities would overlap in the production of rear lamps for the OEM/OES market and for the IAM market, and, to a limited extent, in the market for auxiliary rear lamps. In fact, prior to the acquisition of SEIMA, MM had been active in the development, production and distribution of automotive lighting equipment only via its 50% participation in MALB and by selling automotive lighting equipment into the IAM through its 100% subsidiary R.C.I. Ricambi Centro Italia S.r.l. (RCI).

13. In 1999, in the market for rear lamps for the OEM/OES, SEIMA had a market share of [30-35]% and MALB of [<10]% EU wide, whilst in the after market their market shares, at the European level, were much lower (SEIMA [20-25]%, MALB [<5]%). Assuming that the market for IAM were national in scope, the combined market shares of SEIMA and MALB would be somewhat higher. In particular SEIMA reached [30-35]% market share in Italy, where MALB had [5-10]%, and exceeded [50-55]% in Spain, where MALB enjoyed only [<5]% of that market. SEIMA was also active in the market for auxiliary lamps for the OEM/OES ([30-35]% market share EU wide) where MALB's presence in 1999 was negligible ([<5]% market share). Taken into account that, at both national and European levels, the market for rear and auxiliary lamps was relatively competitive, the Commission cleared the concentration between MM and SEIMA.

14. The figures reported above reflect, in fact, the respective market shares of SEIMA and MM, in a situation subsequent to MM and BOSCH constitution of MALB but precedent to MM acquisition of sole control over SEIMA. However, after completion of this latter operation in June 2000 and its clearance by the Commission, the overlapping activities of the parties have definitively consolidated into a common, aggregate market position (i.e. includes both SEIMA and MALB). It follows that the notified operation will produce no real increase in the market shares of MM. These market shares will remain those illustrated in paragraph 13 above.

15. Furthermore, it should be added that the structure of the markets in question has not changed since the recent assessment by the Commission in the case MM/SEIMA. The market for rear lamps for both the OEM/OES and the IAM remains rather competitive at national and European levels with a number of relatively strong competitors. In the OEM/OES market, Valeo, has market shares EU wide of [30-35]%, Hella [15-20]%, others of [15-20]%. In the IAM, Valeo enjoys [15-20]% of the EU market, Hella [15-20]%, other competitors [40-45]% and even at national level the relatively strong combined market position of the parties has not further augmented, nor the market balance that the Commission assessed positively one year ago developed in any substantial way. Also the market for auxiliary rear lamps for the OEM/OES appears rather competitive, where Valeo reaches market shares of [30-35]% EU wide, Hella [10-15]% and others [30-35]%. All the above markets are also characterised by the absence of tariff barriers or other types of barriers to entry, and by the relatively low costs of transportation that may not be considered as relevant factors influencing the price of the above products.

16. For the above reasons, it appears that the notified operation does not create or strengthen a dominant position in any of the relevant markets, a result of which effective competition would be significantly impeded in the EEA or in any substantial part thereof.

V. Conclusion

17. For the above reasons, the Commission has decided not to oppose the notified operation and to declare it compatible with the common market and with the EEA Agreement. This decision is adopted in application of Article 6(1)(b) of Council Regulation (EEC) No 4064/89.

For the Commission,

signed by M. Monti, (Member of the Commission)