EUROPEAN  COMMISSION  
 
 
 
Brussels,  26.7.2021  
C(2021)  5654 final  
PUBLIC VERSION  
AerCap Holdings N.V.  
65 St. Stephen’s Green  
D02 YX20 – Dublin  
Ireland  
Subject : Case  M.10231 – AERCAP  / GECAS / SES  
Commission decision pursuant to Article 6(1)(b) of Council Regulation  
No 139/20041 and Article  57 of the Agreement  on the European  Economic  
Area2 
 
Dear  Sir or  Madam,  
 
(1) On 18 June 2021, the European Commission received notification of a proposed  
concentration (the “Transaction”) pursuant to Article 4 of the Merger Regulation by  
which  AerCap  Holdings  N.V.  ("AerCap",  The Netherlands)  acquires  within  the 
meaning of Article 3(1)(b) of the Merger Regulation sole control of the whole of GE  
Capital Aviat ion Services ("GECAS", US), belonging to General Electric Company  
(“GE”, US) and, within the meaning of Articles 3(1)(b) and 3(4) of the Merger  
Regulation, joint control together with Safran Aircraft Engines (“Safran”, France)  
over Shannon Engine Support L imited ("SES", Ireland), currently jointly controlled  
by GE and Safran. The concentration is accomplished by way of purchase of shares  
and assets.3 
 
 
 
 
 
 
 Handling  instructions  for SENSITIVE  information  are given  at https://europa.eu/!db43PX.  
1 OJ L 24, 29.1 .2004, p. 1 (the “Merger Regulation”). With effect from 1 December 2009, the Treaty on the  
Functioning of the European Union (“TFEU”) has introduced certain changes, such as the replacement of  
“Community” by “Union” and “common market” by ‘internal market’. The terminology of the TFEU will  
be used  throughout  this decision.  
2 OJ L 1, 3.1.1994,  p. 3 (the “EEA  Agreement”).  
3 Publication  in the Official  Journal of  the European  Union  No C  251, 28.6.2021,  p. 28. 
 
 
Commission européenne, DG COMP MERGER REGISTRY , 1049 Bruxelles, BELGIQUE  
Europese  Commissie, DG  COMP  MERGER REGISTRY, 1049  Brussel,  BELGIË  
 
Tel: +32 229-91111.  Fax: +32 229-64301.  E-mail: COMP -MERGER -REGISTRY@ec.europa.eu . 

2  
 1. THE PARTIE S  
 
(2) AerCap's primary business is the leasing of commercial aircraft, which it carries out  
on a worldwide  basis. AerCap  has its  global headquarters  in Dublin,  Ireland.  
 
(3) GECAS is active in the commercial aircraft leasing and financial industry, offering a  
broad array of leasing and financing products and services for commercial aircraft,  
turboprops, aircraft engines, helicopters and materials. GECAS is headquartered in  
the United States and is currently  part of  the group  ultimately  owned by  GE. 
 
(4) SES is a subsidiary of CFM International (“CFMI”), a jointly controlled 50/50 full  
function4 joint venture between GE and Safran. SES is active in aircraft engine  
leasing.  
 
(5) AerCap,  GECAS  and SES are hereinafter  referred to  as the “Parties”.  
 
2. THE OPE RATION  AND  CONCE NTRATION  
 
(6) On 9 March  2021,  AerCap  entered  into a Transaction  Agreement  with GE pursuant  
to which  AerCap  will acquire  sole control  over the  GECAS  business  and joint 
control over SES, with Safran being the other jointly controlling parent company.  
Hereinafter, AerCap as it will emerge post -Transaction is referred to as the “Merged  
Entity”.  
 
(7) As part of the Transaction, GE will also acquire approximately 46% of the Merged  
Entity’s shareholding and will be entitled to nomina te two directors of its Board of  
Directors (the “Board”)5 and to appoint one of those GE directors to the Nomination  
and Compensation Committee of the Board.6 However, this stake will not grant GE  
joint control over AerCap.  
 
(8) This is because under the Shareholders’ Agreement (“SHA”) GE has agreed to a  
restriction of its ability to vote, such that GE may only vote shares constituting up to  
24.9%  of the total AerCap  shares  eligible  to vote.7 Taking  into account  the 
attendance and voting levels at AerCap's  annual general meetings over the last four  
years,  GE would not  be highly likely to  achieve a majority at  the shareholders’  
annual  general  meetings  of AerCap.8. 
(9) Moreover, under the SHA, GE’s right to nominate two out of the eleven directors of  
AerCap’s Boa rd (at most) and to have one of those GE directors appointed to the  
Nomination  and Compensation  Committee  of the Board,  will not enable  GE to veto 
 
 
 
 
 
4 SES has being operating continuously since its establishment in 1988 with its own resources and assets,  
staff and dedicated management. It has its own presence on the market and conducts its relationship with  
its parents  companies  at arm’s  length.  
5 So long  as GE collectively  owns  at least  10% of AerCap’s  outstanding  ordinary  shares.  
6 So long  as GE collectively  owns  any of AerCap’s  outstanding  ordinary  shares.  
7 GE is only permitted to  vote the entire  stake  in minority  shareholder  protection  matters.  
8 Consolidated  Jurisdictional  Notice,  recital  59. 
3  
 any strategic  decisions  of the Board  (e.g. approval  of budget,  business  plan  or 
appointment  of senior  management).9 
 
(10) As part of the Transaction, AerCap will also acquire joint control over SES.10 SES is  
currently a subsidiary of CFMI, a jointly controlled 50/50 joint venture between GE  
and Safran. CFMI is active in the design, manufacture, marketing, maintenance,  
repair  and overhaul  (“MRO”)  support  of aircraft  engines.  This acquisition  is 
envisaged under two possible scenarios.11 Irrespective of the structure ultimately  
adopted,  AerCap will acquire  joint control over  SES as  a result of the  Transaction.  
 
(11) According to the Parties, the rationale for the Transaction is to create a diversified  
aviation  lessor with  positions  across  aircraft, engine  and helicopter leasing,  and 
related activities, which will be a strategic partner to customers globally. AerCap  
expects  that the combination  with GECAS’  complementary  business  and the 
resulting increase in the diversity of the aircraft portfolio will enable the Merged  
Entity  to provide  high-quality  services  benefiting existing  and new customers.  
 
(12) In light of the above, the Transaction constitutes a concentration within the meaning  
of Article 3(1)(b) of the Merger Regulation and of Articl es 3(1)(b) and 3(4) of the  
Merger  Regulation  respectively,  as far as the acquisition  of sole control  over 
GECAS  and of  joint control over  SES are  concerned.  
 
3. UNION  DIME NSION  
 
(13) The undertakings concerned have a combined  aggregate world -wide turnover of  
more than EUR 5 000 million (AerCap: EUR 3 789 million, GECAS: EUR 3 460  
million, SES: EUR […]).12 Each of at least two of the undertaking concerned  has an  
aggregate Union -wide turnover in excess of EUR 250 million ( AerCap: […] million,  
GECAS:  […] million ). Not all of the undertaking  concerned  achieve  each more  than 
two-thirds  of their aggregate  Union -wide turnover  within  one and the same 
Member State.  
 
(14) The notified operation therefore has a Union dimension pursuant to Art. 1(2) of the  
Merger  Regulation.  
 
9 Each director has the right to cast one vote, all resolutions shall be passed by an absolute majority of the  
votes cast and the Board can only pass resolutions when a quorum of four directors are present. It follows  
that the presence of GE directors in the AerC ap Board would not be required in order to reach a quorum,  
and the two directors  designated by  GE could  not pass  any resolutions  by themselves.  
10 The acquisition s of GECAS and of SES are linked by conditionality. As a result, the two transactions are  
consi dered as a single concentration  […]. 
11 Under one scenario, […]. Under the other scenario, […] . 
12 Turnover  calculated  in accordance  with Article  5 of the Merger  Regulation.  
4  
 4. ASSE SSME NT  
 
4.1. No horizontal concerns with  respect  to aircraft  leasing  
 
4.1.1.  Market  definition  
 
4.1.1.1.  Relevant  product  market  
(15) Aircraft are expensive assets. According to the Parties, the average list price of a  
narrow body aircraft (i.e. one aisle, 100 -200 passengers) is USD 100 -110 million  
while the price of a wide body aircraft (i.e. t wo isles, 200 -400 passengers) is USD  
300-320 million.13 Considering the cost involved, airlines often require financial  
solutions in order to source aircraft. Such solutions may be in the form of loans from  
creditors,  funding  from capital markets  or different types of leasing.  
 
(16) The Parties argue that aircraft leasing is in essence one type of financial solution for  
airlines to acquire aircraft and as such belongs to a market that encompasses all types  
of aircraft financing  solutions.14 
 
(17) In previous de cisions, the Commission considered two distinct markets for aircraft  
leasing:15 
 
(a) Wet leasing: by which the aircraft is leased with its crew, maintenance and  
insurance. These are typically short term transactions between two airlines.16 
The Parties are  not active  in wet leasing.  
 
(b) Dry or operational  leasing:  by which only the  aircraft is  leased.17 Around  
41% of the total worldwide number of commercial aircraft is on dry leases.18 
The Parties overlap in dry  leasing.19 
 
(18) The Commission also considered a segmentation of dry leasing according to aircraft  
size: wide-body  (200-400 seats),  narrow -body  (100-200 seats)  and regional  aircraft,  
 
 
 
 
 
13 Form  CO, paragraph  6.3. 
14 Form  CO, paragraph  6.44 et seq.  
15 Case M.9287 - CONNECT AIRWAYS / FLYBE, paragraph 214 et seq;  COMP M.9062 FORTRESS  
INVESTMENT  GROUP  /AIR INVESTMENTVALENCIA  / JV, paragraphs  44-45. 
16 Form  CO, paragraph  6.8. 
17 This is in contrast to other industries where “operational leasing” means a type of lease where the lessor  
provides other services such as maintenance and insurance. In aircraft leasing it is in wet leasing that the  
lessor  provides  such  additional  services. Form  CO, paragraph  6.59 et seq.  
18 Form  CO, paragraph  6.16. 
19 The Parties are also active to a limited extent in “finance leasing” (less than 5% of each Parties’ turnover  
and assets, Form CO, footnote 28 and paragraphs 6.68, 6.138 et seq). Finance leasing is a type of dry  
leasing at the end of which the lessee purchases the aircraft. Otherwise, it is similar to dry leasing (Form  
CO, paragraph 6. 59 et seq.). Industry reports do not distinguish between finance leasing and other dry  
leasing (Form CO, footnote 3 and 50). In the past, the Commission did not consider a distinction between  
finance and dry leasing and no indication was provided during th e market investigation that finance  
leasing  should  be further  distinguished  from dry leasing.  
5  
 which  can be sub-divided  further  to aircraft  of 30-50 seats  and aircraft  of 70-90 
seats.20 
 
(19) The market investigation in this case suggested that  dry leasing may be further  
segmented according to types of lease.21 Thus, sale and lease back (“SLB”) is a lease  
by which an airline is selling to a lessor an aircraft it already has in its fleet or an  
aircraft it has on order from an aircraft manufacture r (“airframer”) and immediately  
leases it back from the lessor. In the second type of dry leasing, the lessor is the  
original owner of the aircraft (for example because it ordered it directly from an  
airframer). This latter type of leasing is referred to a s “direct”, “speculative” or  
“placement”  leasing.22 
 
(20) According to market participants, SLB and direct leasing are different services from  
the demand side. 23 SLB’s serve financial needs of airlines; airlines would rely on  
SLB leasing when they own the aircraft but are looking for more liquidity or to cut  
capital expenses. Direct leasing serve operational needs: airlines would rely on direct  
leasing when they need more aircraft but cannot purchase them themselves, for  
example because the time to order th em directly from airfarmes is too long24 or when  
they cannot order  them directly  from the  airframers.  25 
 
(21) From the supply side, direct leasing represents higher risk for lessors compared to  
SLBs because, unlike with SLBs, with direct leasing the lessor bea rs the risk of  
finding  a lessee  for the aircraft.26 In addition,  ordering  aircraft  directly  from 
airframers is highly complicated and requires very specific expertise that only a  
minority of lessors have.27 While more than 150  lessors are active in SLB, on ly 
about 15 -20 are  regularly  active  in direct  dry leasing.28 
 
(22) Rates to be paid for SLBs and direct leases are also different. While the rate of SLB  
is primarily  based  on the price  of the aircraft  paid by the airline  offering  it for SLB,  
 
 
 
 
20 Case M.9287 CONNECT AIRWAYS / FLYBE, paragraphs 214 et seq; COMP M.9062 FORTRESS  
INVESTMENT  GROUP  /AIR INVESTMENTVALENCIA  / JV, paragraphs  44-45. 
21 Form  CO, paragraph  6.7 et seq; minutes  of a call with a lessor,  paragraph  2 [ID328];  minutes  of a call 
with an airframer, paragraphs  2-3 [ID358]; minutes  of a call with a lessor,  paragraph  5 [ID360].  
22 Unlike with SLB leasing in which the lessee is known upfront, in direct leasing the lessor buys the aircraft  
“speculatively”  hoping  to find  “a placement” (i.e.  a lessee)  for the  aircraft.  
23 Minutes of a call with an airline, paragraph 7 [ID54]; minutes of a call with a lessor, paragraph 9 [ID154];  
questionnaire  to customers, responses  to question  4. 
24 The process of ordering directly with an airframer takes several years before the aircraft are delivered. The  
process  is shorter  when  leasing  from a lessor  that already  placed the  order,  or has aircraft  available.  
25 When ordering directly from airframers, airlines need to make large payments before the aircraft is  
delivered. Another difficulty is that airframers prefer working with large credible customers and may not  
accept orders from smaller or less reputable airlines; Minutes of a call with an airline, paragraph 7 [ID54];  
minutes  of a call with  a lessor,  paragraph  9 [ID154];  quest ionnaire  to customers,  responses  to question  4. 
26 Minutes of a call with a lessor, paragraph 2 [ID328]; minutes of a call with a lessor, paragraph 5 [ID360];  
minutes  of a call  with an airframer, paragraph  2 [ID358].  
27 Questionnaire to competitors, responses to  question 5; minutes of a call with a lessor, paragraphs 6 and 14  
[ID154];  minutes  of a call  with an airframer, paragraph  2 [ID358].  
28 Minutes of a call with a lessor, paragraph 6 [ID328]; Minutes of a call with an airline, paragraph 9 [ID54];  
questionnaire  to customers, responses  to question  6. 
6  
 the rates of direct  leases  are based  on the balance  of demand  and supply  for the 
aircraft  at the  time it is leased.29 
 
(23) In accordance  with the Commission  practice  mentioned  above,  a further  
segmentation by type of aircraft should be considered also with respect to the two  
types of dry leasing. Another possible distinction is between passenger and non - 
passenger (or  cargo)  aircraft  that serve  different  demand needs.  
 
(24) Specifically in relation t o direct dry leasing, market participants explained that direct  
leasing of wide body aircraft represent a higher risk to lessors compared to leasing of  
narrow body aircraft. Wide body aircraft are three times more expensive than narrow  
body aircraft and de mand for them is much smaller than for narrow body aircraft.  
Consequently, it is more difficult for lessors to find a lessee for wide body aircraft.  
Another  significant  difficulty,  when  the lessor  seeks  to replace  a lessee,  is re- 
branding. When an aircraf t changes from one airline to another, it has to be re -fitted  
in order to comply with the branding of the new airline. Wide body aircraft are more  
expensive to re -brand not only because they are bigger but also because airlines  
invest significantly more  in branding their premium classes  that are usually served  
by wide body aircraft, an investment that is not typically made in narrow body  
aircraft.  Consequently,  out of about  15-20 lessors  regularly active  in direct  dry 
leasing, only about five to ten are con sidered to be regularly active in the dry leasing  
of wide body  aircraft.30 
 
(25) On the basis of the above, the Commission concludes that there is a separate market  
for dry leasing. It can be left open whether the market for dry leasing should be  
further segmen ted between type of leasing or type of aircraft, as the Transaction does  
not raise competition concerns under  any plausible  market definition.  
 
4.1.1.2.  Relevant  geographic  market  
(26) In previous  decisions,  the Commission  considered  the geographic  scope  of the 
market  for aircraft  dry leasing  to be worldwide.31 The Parties  agree  with the 
Commission’s approach.32 The market participants also confirmed this approach in  
the market investigation in this case.33 
 
 
 
 
 
 
 
29 Minutes  of a call with  an airline, paragraph  8 [ID54];  minutes  of a call with a lessor,  paragraph  4 [ID328].  
30 Minutes of a call with an airframer, paragraph 2 [ID358]; minutes of a call with an industry association,  
paragraph 7 [ID360]; minutes of a call with a lessor, paragraph 5, [ID360]; minutes of a call wi th an  
airframer, paragraph 5 [ID304];  minutes of a call  with a lessor, paragraph 6 [ID328]; minutes of a call  
with a lessor,  paragraph  11 [ID154];  questionnaire to  customers,  responses  to question  6. 
31 Case  M.9287  - CONNECT  AIRWAYS  / FLYBE,  paragraph  221; COMP  M.9062  FORTRESS  
INVESTMENT  GROUP  /AIR INVESTMENTVALENCIA  / JV, paragraph2  46-48. 
32 Form  CO, paragraph  6.87 et seq.  
33 Questionnaire to competitors, responses to question 7; Questionnaire to customers, responses to questions  
7 and 8; minutes of a call with a lessor, paragraph 4 [ID154]; minutes of a call with a lessor, paragraph 8  
[ID360]; minutes of a call with an industry association, paragraph 8 [ID360]; minutes of a call with an  
airline, paragraph  10 [ID54].  





12  
 number of recent entries.45 Chinese lessors, in particular some who are part of major  
financial  institutions,46 were  growing  fast in recent  years  and gaining  market  
shares.47 Overall, the leasing industry has become more fragmented  in past  years.48 
In fact, since 201349 the number of aircraft in each of the Parties’ fleets has been  
constantly  decreasing  (AerCap  -22%,  GECAS  -39%)  while  the overall  aircraft  
leasing industry was growing.50 Consequently, as also shown by Tables 1 and 2  
above, the Parties’ shares have been decreasing in the overall market for dry leasing  
and in the wide body  segment.  
 
(35) Although  the Transaction  will create  the largest  lessor  worldwide,  the market  
investigation did not provide a clear indication that the Merged Entity would obtain  
an additional significant advantage over its competitors. While some of the market  
participants considered that the size of the Merged Entity would give it an advantage  
over its competitors, others opined that once a certain fleet size is achieved (about  
300 aircraft)  there  is little advantage  to additional  size and there  may even be 
disadvantages.51 Market  participants  therefore  expect  that post-Transaction  the 
Merged Entity would rationalise and decrease its combined fleet as AerCap did after  
the purchase  of ILFC.52 
(36) Market  participants  also point  out that there  are several  strong  lessors  with 
sufficiently  large fleets  that will remain  in the market  post-Transaction;  in addition  
to the Parties there are at least nine lessors with fleets larger than 300 aircraft across  
all aircraft types, including wide body aircraft.53 Market participants also did not  
identify  the Parties  as closer  competitors  to each other than  other  lessors.  They noted  
 
45 Form CO, paragraphs 7.11 et seq and 8.43 et seq; minutes of a call with a lessor, paragraph 14 [ID154];  
minutes of a call with an airline, paragraph 11 [ID54]; Minutes of call with an airframer, paragraph 12  
[ID358].  
46 Among  the top-12 lessors  worldwide,  four belong  to the following  Chinese  banks:  Industrial  and 
Commercial Bank of China,  Bank of China, Bank of communications and China Development Bank.  
Form  CO, page 162  (annex  7). 
47 Parties’  internal  document,  document  5.4.(iii)  – 22 – 3Q'20  Operating  Review,  slide  5; Minutes  of call 
with an airframer,  paragraph  8 [ID358];  Minutes  of call with a  lessor,  paragraph  10 [ID332].  
48 From CO, page 174 (annex 7.10), paragraph 7.15 et seq; Minutes of call with a lessor, paragraph 13  
[ID332]; Minutes of call with an airframer, paragraph 4 [ID304]; minutes of a call with an airline,  
paragraph  11 [ID54].  
49 In 2013, AerCap purchased  from AIG its leasing aircraft company ILFC that was at the time, together  
with GECAS, one of  the two largest  aircraft  lessors  worldwide.  
50 From  CO, page  174 (annex  7.10),  paragraph  7.15 et seq. 
51 OEMs and airlines prefer spreading their exposure to lessors and may therefore prefer working less with  
AerCap post -Transaction. In addition, very large fleets,  especially those created as a result of merging two  
previously independent portfolios, may represent imbalances in exposure to risk (e.g. too many aircraft of  
the same type or leased to the same customers). Moreover, keeping a large fleet on the books pla ces high  
burden of depreciation. Minutes of call with an airframer, paragraph 11 [ID358]; minutes of a call with a  
lessor, paragraphs 12 -13 [ID154]; minutes of a call with an airline, paragraph 13 [ID54]; minutes of a call  
with a lessor, paragraph 14 [ID33 2]; minutes of a call with a lessor, paragraph 19 [ID332]; minutes of call  
with an airframer, paragraph 7 [ID304]; minutes of call with engine manufacturer, paragraph 11 [ID315];  
questionnaire to customers, response to question 13, 13.2 and 14; questionnai re to competitors, responses  
to questions  12, 12.2, 15.1  and 15.2. 
52 Minutes of a call with a lessor, paragraph 18 -19 [ID332]; minutes of a call with a lessor, paragraph 9  
[ID328];  minutes  of a call  with an airline,  paragraph  13 [ID 54]. 
53 […] Form CO, page 174 (annex 7.10). See   also minutes  of a call with an airline,  paragraph  13 [ID54].  
13  
 that at least the other major lessors as close competitors (even if significantly smaller  
by size).54 Some market participants explained that, in their view, all lessors active in  
a specific  aircraft  leasing  segment  compete  with each other55 and would  be 
considered  by airlines.56 Indeed,  airlines  typically work  with a large number  of 
lessors.57 Airlines prefer working with several lessors also in order to  manage their  
exposure  to them.58 
(37) Furthermore, the market investigation was inconclusive as to whether the Merged  
Entity will obtain post -Transaction a stronger position vis -à-vis the airframers that  
may give it an advantage compared to other lessors. Whil e some market participants  
considered that this may be the case, others opined that the Merged Entity would not  
acquire  such advantage  because  airframers  have other  large customers  and also 
prefer to manage  their exposure to customers.59 
 
(38) In addition,  with respect  to the market  for direct  leasing  of wide body aircraft  
specifically, the smaller number of lessors for direct wide aircraft compared to the  
number  of lessors  for narrow  body  aircraft  can be primarily  explained  by the 
significantly smaller size of the market.60 Nevertheless, in the years 2018 -2020 there  
were seven lessors that, in addition to the Parties, were regularly (that is, every year)  
active in the market, offering wide body aircraft for direct lease.61 In addition, there  
are other  large lessors that have experience  in this market  and may re -enter  if 
conditions  are favourable.62 Currently  for example,  four lessors  that were  not 
regularly active in this market in the past three years have orders with airframers for  
wide body aircraft.63 In addition, market participants explained that direct leasing is  
less important  with respect  to wide body  aircraft.  First,  wide body  aircraft  are 
typically operated by the larger airlines that are able to order directly from the  
airframers. Second, airframer s have more capacity to take orders for wide body  
aircraft  (because  demand  is lower)  and the lag time for delivery  is shorter  (18-24 
 
 
54 In addition to the lessors already noted in footnote 51, market participants also mentioned […]. 
Questionnaire  to customers,   responses  to questions  10 and  11; questionnaire  to competitors,  responses  to 
questions  9 and 10.  
55 For example,  all lessors  active  in direct  leasing  of wide  body  compete  against  each  other.  
56 Questionnaire to customers, responses to questions 10 and 11; questionnaire to competitors, responses to  
questions  9 and 10;  minutes  of a call  with an airline, paragraph  5 [ID54].  
57 The top -20 leasing European airlines (by number of leased aircraft) are working with 5 to 31 lessor (17  
lessors on average); Form CO, page 173 (annex 7.6.2). See also questionnaire to customers, responses to  
question  9. 
58 Minutes of a call with a lessor, paragraph 13 [ID154]; minutes of a call with a lessor, paragraph 13  
[ID328].  
59 An airframer explained that because lessors place orders  regularly with all airframers, airframers compete  
less fiercely on lessors’ orders than on airlines’ orders; call with an airframer, paragraphs 11 -12 [ID304],  
questionnaire  to customers,  question  14.3;  questionnaire to competitors,  responses  to question  15.3. 
60 There are about 1 283 wide body aircraft worldwide on direct lease compared to more than 5 732 narrow  
body  aircraft;  Form  CO, annex  6.7, pages  43 and 44. 
61 […]; Form CO, annex 6.8A,  page 8.  
62 Minutes  of call with an airframer,  paragraph  13 [ID358].  
63 […] Form  CO, annex  6.10 A, page  4. Airframers,  […] may occasionally  assist    customers in various ways 
to finance their orders, including through direct dry leasing; minutes of a call  with an airframer, paragraph  
9 [ID358];  minutes  of a call  with a lessor,  paragraph  2 [ID304].  
14  
 months)  than for narrow  body.  Consequently,  airlines  can order  more  easily  wide 
body  aircraft  directly  from the  airframers and  are less  dependent  on lessors.64 
 
(39) In view of these considerations, the large majority of market participants responding  
to the market investigation were of the view that the Transaction does not give rise to  
competition concerns.65 
 
(40) The Commission therefore considers that the Transaction is unlikely to raise serious  
competition  concerns  with respect  to dry aircraft  leasing  and all its plausible  
segments.  
 
4.2. No concerns  regarding conglomerate  effects:  aircraft  leasing  and engine  leasing  
(41) Through the Transaction, AerCap will purchase the aircraft engine leasing business  
of GE, that is, the activities of GECAS  and SES in this sector. Engine leasing  
provides airlines with spare engines. In order to ensure undisrupted operation of their  
aircraft fleet, airlines have a certain number of spare engines available to replace  
engines that require MRO  services. Engines typically require a first overhaul after  
approximately 7 to 10 years and, thereafter, every six years on average.66 Airlines  
may purchase  spare  engines  or lease  them from engine  lessors.  Spare  engines  
represent about 10% of aircraft engi nes worldwide67 and less than half of spare  
engines are  leased.68 
 
(42) According to the estimates of the Parties, GE’s engine leasing business represents  
about  [20-30]%  of leased  engines  worldwide.69 It has an intra-group  focus;  the 
majority      of the engines  owned by GECAS and all engines owned by SES are GE and 
CFMI  manufactured engines. GECAS and SES also lease back the majority of their 
engines  to GE and CFMI  for their product support services.70 
 
(43) Other engine manufacturers also have engine leasing arms, for example Rolls Royce  
and Pratt & Whitney, which, according to the estimates of the Parties, represent  [10-
20]%  and [10-20]%  of leased engines respectively. The Parties estimate that other 
large engine  lessors  are Engine  Lease  Finance  ([10-20]% ), Willis  Lease  ([10-
20]% ) and Fortress  ([5-10]% ).71 
 
 
 
64 Minutes  of a call with an airframer,  paragraphs  13-14 [ID358].  
65 Minutes of a call with an airframer, paragraphs 11 and 13 [ID358]; minutes of a call with an industry  
association, paragraphs 2 and 9 [ID360]; Minutes of a call with a lessor, paragraph 12 [ID332]; minutes of  
a call with an airframer, paragraph 7 [ID304]; minutes of a call with a lessor, paragraph 13 [ID328];  
Minutes of a call with a lessor, paragraph 17 [ID154]; minutes of a call with an airline , paragraph 15  
[ID54]; questionnaire to customers, responses to question 17; questionnaire to competitors, responses to  
questions  17-18. 
66 Form  CO, paragraph  6.243.  
67 Form  CO, paragraph  6.244;  minutes  of call with engine  manufacturer,  paragraph  9 (ID315).  
68 Parties’ internal document, “5.4.(iii) - 28 - 2Q'19 Operating Review  Culp overview_Redacted”, page 54.  
The other  engines  are owned  by the airlines.  
69 According to the estimates of the P arties, in 2020 GECAS owned [10 -20]% of leased engines worldwide 
and SES [10-20]% . GECAS  also administered  for other  owners  additional [5 -10]% of leased  engines.  
Form CO,  paragraph  6.271  (table 6.5).  
70 Form  CO, paragraph  6.250 et  seq; Parties’  internal  document  “5.4.(iii)  - 23 - Operating Review”  page 44.  
71 Form  CO, paragraph  6.271  (table  6.5). 
15  
 There  is a large number  of additional  dedicated  engine  lessors,  aircraft/engine  mixed  
lessors and  airline/MRO  lessors.72 
 
(44) The Parties explained that AerCap does not operate any dedicated aircraft engine  
leasing business. It has occasionally leased out a negligible number of engines that it  
has taken off its old aircraft.73 Currently, AerCap has only [0-5] engines on lease in a  
market  estimated  by the Parties  at around  3 000 engines.74 Consequently,  the 
Transaction does not gi ve rise to horizontal competition  concerns in aircraft engine  
leasing.  
 
(45) Aircraft  lessors  are typically  not (although  occasionally  could  be) customers  of 
engine  leasing  services.75 The customers  of engine  leasing  services  are mostly  
airlines and providers of aircraft engine maintenance services.76 In view of this, there  
is also no vertical  foreclosure concern. However,  a hypothetical  concern could be  
that the Merged Entity, could bundle or tie engine leasing services to aircraft leasing  
services thus exclud ing other engine lessors.77 The Parties confirmed that in the past  
GECAS did not bundle or tie aircraft and engine leasing and the Merged Entity will  
not be able to do so post -Transaction. The Parties explain that airlines do not lease  
engines when leasing  an aircraft. First, because  as explained above, the aircraft  
would require engine maintenance only after at least six  years. Second, airlines  
typically have a pool of spare engines (owned or leased) that serves their fleet and do  
not link leases for  specific  engines with leases  for specific aircraft.78 
 
(46) The market investigation did not indicate that the Transaction is likely to give rise to  
serious concerns of conglomerate effects. While a small number of respondents did  
mention that the Transaction could strengthen the position of the Merged Entity in  
engine leasing, others opined that the Transaction would not affect competition in  
that respect.  Overall,  the large majority  of respondents  did not raise possible  
concerns with respect to engine  leasing .79 
 
4.3. No concerns  regarding  GE’s  minority  shareholding  in AerCap  
(47) As a result of the Transaction, there will be a link, via GE’s minority shareholding in  
AerCap, between GE’s activity in engine manufacturing and the Merged Entity’s  
activity  in aircraft  leasing,  as well as a link between  GE’s  activity  in engine  
 
 
 
72 Parties’  internal  document,  “5.4.(iii)  - 23 - Operating  Review”,  page  9. Airline/MRO  lessors  are 
subsidiaries of airlines that provide in -house and external MRO services; see minutes of call with an  
engine  manufacturer, paragraph  6 [ID315].  
73 Form  CO, paragraphs  6.239.  
74 Form  CO, paragraphs  6.256 -6.257  and 6.271  (table  6.5). 
75 Form  CO, paragraph  6.272;  call with a lessor,  paragraph  12 (ID328).  
76 Form  CO, paragraphs  6.251,  6.254;  call with industry  association,  paragraph  10 (ID360).  
77 The Commission  Guidelines  on the assessment  of non-horizontal mergers,  recitals  96-97. 
78 Form CO, paragraphs 6.276 et seq and page 146, paragraph 3.5 (annex 6.13); see also minutes of a call  
with an airframer, paragraph  14 [ID14].  
79 Questionnaire to customers, question 18; questionnaire to competitors, question 19; minutes of a call with  
an engine manufacturer, paragraph 11 [ID315]; minutes of a call with minutes of a call with an airframer,  
paragraph 14 [ID14]; minutes of a call with an industry association, paragraph 10 [ID360]; minutes of a  
call with a lessor, paragraph  12 [ID328].  
16  
 manufacturing  and the Merged Entity’s activity,  through  GECAS and  SES,  in engine  
leasing.  However,  these  links will not  give rise to  vertical competition  concerns.  
 
(48) As illustrated in Section 2 of this Decision, GE will not acquire control over the  
Merged Entity as a result of the Transaction, in spite of it holding a significant  
minority shareholding in the Merged Entity post -Transaction. GE’s rationale in the  
Transaction appears to be linked to the possibility of monetising its participation in  
the Merged Entity over time. Evidence of this has been found in the Parties’ internal  
documents,80 where clear reference is made to the prospect for GE of obtaining  
incremental proceeds by fully exiting over time. Accordingly, as the sector recovers,  
GE plans to exit the Merged Entity’s shareholding through a public market sell  
down.81 Some respondents to the market investigation have show n to have the same  
understanding  of the rationale  of GE’s  participation  in AerCap  as they have 
indicated that they expect GE to reduce its participation in AerCap in several years’  
time.82 
 
(49) As regards the link between GE’s activity in engine manufacturing and the Merged  
Entity’s activity in aircraft leasing, the Commission considers it unlikely that the  
Merged Entity  would  engage  in any  input or customer  foreclosure  strategy.  
 
(50) As regards  input foreclosure,  even if GE had the ability  to foreclose  lessors  
competing with the Merged Entity by withholding supplies of aircraft engines from  
aircraft  airframers,  it would  lack the incentive  to pursue such a strategy,  as its 
interest is to sell as many of its engines as possible. As the Merged Entity would not  
be able  to absorb all the demand for GE -powered aircraft, GE would only stand to  
lose sales of engines if it were to pursue such a strategy. In line with this, the market  
investigation  has provided  no indication  that GE’s  minority shareholding in  the 
Merged  Entity might raise concerns.  
 
(51) Some respondents pointed to the possibility that GE might favour the Merged Entity,  
by for instance  granting  greater  discounts  on GE engines  than other  lessors.83 
However, the majority of the respondents who have expressed a view have raised no  
concern,84 with some confirming that, as a result of the Transaction, the Merged  
Entity  will have  a mixed portfolio of aircraft with  different  engines.85 
 
(52) As regards customer foreclosure, by lacking control over the Merged Entity, GE  
would l ack the ability of foreclosing competing engine manufacturers by favouring,  
via the Merged Entity, GE engines through orders placed with airframers. This lack  
of ability  can also be explained  by the fact that typically  airframers  and airlines,  not 
 
80 Document 5.4.(i) - 01 - Jameson Approval, slide 31; document 5.4.(ii) - 06 - Executive Session, slide 7;  
document  5.4.(i)  - 05 - Edited  Transcript  General Electric  Co Outlook  Conference  Call, page  4. 
81 Document  5.4.(ii)  - 06 - Executive  Session, slide  7. 
82 Minutes of a call with an airline, paragraph 14 [ID54]; minutes of a call with a lessor, paragraph 10  
[D328]. Minutes of a call with a lessor, paragraph 10 [D328]. See also minutes of a call with an airline,  
paragraph  14 [ID54].  
83 Questionnaire  to customers,  responses  to question  15. 
84 Questionnaire  to competitors,  responses  to question  16; questionnaire  to customers,  responses  to question  
15. Minutes  of a call with a lessor,  paragraph  15 [ID154];  minutes  of a call with a lessor,  paragraph  20 
[ID332];  minutes  of a call  with an airline,  paragraphs  13-15 [ID54].  
85 Minutes of a call with an engine manufacturer, paragraph 11 [ID315]; questionnaire to competitors,  
response  to question  16. 
17  
 lessors, drive engine purchases’ choices. Airframers decide wh ich engine to certify  
on an aircraft platform based on their preferences and what they anticipate airlines’  
demand for new aircraft will be. If airframers certify more than one engine, then  
airlines choose which engine they want on their aircraft.86 This was confirmed by the  
market  investigation.87 
 
(53) Moreover, even if it had the ability to favour GE’s engines by placing orders for GE - 
powered aircraft with airframers, the Merged Entity would lack the incentive to do  
so. Lessors order aircraft that they expe ct they will be able to lease to airlines. Their  
interest  is to satisfy  airlines’  demand  for the combinations  of aircraft  and engines  
that airlines desire. The Merged Entity’s interest will therefore be to have a mixed  
portfolio of aircraft powered by diff erent engines so as to be able to address that  
demand. Moreover, the Merged Entity’s shareholders other than GE would have no  
interest in favouring orders for GE -powered aircraft and therefore would not agree to  
such a strategy.  As indicated  in the preceding  paragraph,  the market  investigation  
has provided no indication that GE’s minority shareholding in the Merged Entity  
might  raise concerns.  The majority  of the respondents  who have expressed  a view 
did not raise any concern.88 An industry  associati on has also indicated  that it does 
not expect the  Merged Entity  to favour  GE’s engines.89 
 
(54) With respect to the possible link between GE’s activity in engine manufacturing and  
the Merged Entity’s activity in engine leasing, the Commission considers an input  
foreclosure strategy whereby GE would favour the Merged Entity to the detriment of  
competing engine lessors highly unlikely. First, the Transaction does not bring about  
any significant  change in the market structure. The link between GECAS and GE  
was pre -existing, and, as a result of the Transaction will be severed as GE will no  
longer  exert  control  over GECAS,  via AerCap.  Moreover,  as explained  above,  
AerCap has a very limited activity in the engine leasing business.  Consequently, the  
increment brought ab out by the Transaction will be negligible ([0-5%]). Second, 
even if GE could in theory decide to exclusively or largely supply the Merged Entity, 
GE will have no interest  and therefore  incentive  to foreclose  engine  lessors  other  
than the Merged Entity. The  market investigation has shown no signs that pre -
Transaction  GE engaged  in such a foreclosure  strategy,  nor that the Transaction  may 
raise concerns  of this type.  
 
(55) A customer foreclosure strategy is similarly unlikely. First, even if the Merged had  
the ability  to foreclose  GE’s  competing  engine  manufacturers  by purchasing  
exclusively or largely GE engines, it would lack any incentive to do so. The Merged  
Entity’s shareholders other than GE would not agree on such a strategy. It also  
appears  from the mark et investigation  that there  are many  companies  active  in the 
 
 
86 Form  CO, paragraphs  2.4 and 6.167.  
87 Minutes of a call with an engine manufacturer, paragraph 3 [ID315]. A respondent has explained that  
airlines want and do choose engines as this adds one element of competition and drives down the costs of  
either the engine or maintenance and that lessors tend to satisfy airlines’ choice; minutes of a call with an  
airframer,  paragraph  13 [ID304].  
88 Questionnaire  to competitors,  responses  to question  16; quest ionnaire  to customers,  responses  to question  
15. Minutes  of a call with a lessor,  paragraph  15 [ID154];  minutes  of a call with a lessor,  paragraph  20 
[ID332];  minutes  of a call  with an airline,  paragraphs  13-15 [ID54].  
89 Minutes of a call with an airframer, paragraph 12 [ID328]; minutes of a call with an industry association,  
paragraph  10 [ID360].  
18  
 engine leasing market.90 GE’s competitors in the upstream market would therefore  
have alternative customers in the downstream market to whom to sell their engines.  
The market investigation has provided no indication that market participants have  
concerns regarding  a possible  customer foreclosure  strategy.  
 
5. CONCLUSION  
 
(56) For the above reasons, the European Commission has decided not to oppose the  
notified operation and to declare it compatible with the internal market and with the  
EEA Agreement. This decision is adopted in application of Article 6(1)(b) of the  
Merger  Regulation and  Article 57 of  the EEA Agreement.  
 
For the Commission  
 
 
(Signed)  
Margrethe VESTAGER  
Executive  Vice-President  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
90 Minutes  of a call with  an engine  manufacturer,  paragraph  9 [ID315].