Office for Official Publications  of the European Communities 
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 Case No COMP/M.4456 - 
MAHLE / DANA EPG 
  
 
 
Only the English text is available and authentic. 
   
REGULATION (EC) No 139/2004 
MERGER PROCEDURE  
   
Article 6(1)(b) NON-OPPOSITION 
Date: 06/03/2007 
        
In electronic form on the EUR-Lex website under document 
number 32007M4456 
 
 
 
Commission européenne, B-1049 Bruxelles / Eu ropese Commissie, B-1049 Brussel - Be lgium. Telephone: (32-2) 299 11 11.   COMMISSION OF THE EUROPEAN COMMUNITIES 
 
  
 
Brussels, 06.03.2007 
SG-Greffe(2006) D/201071 
     
 To the notifying party  Dear Sirs,  
Subject
: Case No COMP/M.4456 – MAHLE / DANA EPG 
Notification of 30/01/2007 pursuant to Article 4 of Council Regulation No 139/2004
1 
Publication in the Official Journal of the European Union No. C 027, dated 07/02/2007, page 25. 
1. On January 30, 2007, the Commission received a notification of a proposed 
concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004, by which 
the German company Mahle GmbH (hereinafter referred to as "Mahle" or "the notifying party") intends to acquire sole control over the Engines Product Group (Dana EPG) of 
the US-based company Dana Corporation by means of purchase of shares and assets.  
I. THE PARTIES AND THE TRANSACTION 
2. Mahle is a company active in the automotiv e and engine industry and supplies piston 
systems, cylinder components, valve train sy stems, air management systems, and liquid 
management systems to the automotive and the engine industry. Dana Corporation, the seller of Dana EPG, is an automotive supplie r of drivetrains, chassis, engines, and 
structural technologies. Dana Corporation is  under chapter 11 protection in the US.The 
primary products of the business being sold, Dana EPG, are piston rings and bearings 
for internal combustion engines.    
II.  CONCENTRATION 
                                                
 
1  OJ L 24, 29.1.2004 p. 1. PUBLIC VERSION 
MERGER PROCEDURE 
ARTICLE 6(1)(b) DECISION In the published version of this decision, some 
information has been omitted pursuant to Article 17(2) of Council Regulation (EC) No 139/2004 concerning non-disclosure of business secrets and other confidential information. The omissions are shown thus […]. Where possible the information omitted has been replaced by ranges of figures or a general description. 
2 3. The notified operation is intended to confer to  Mahle sole control over Dana EPG, based 
on an agreement signed on December 1, 2006. It  therefore constitutes a concentration 
within the meaning of Article 3(1)(b) of the EC Merger Regulation. 
III. COMMUNITY DIMENSION 
4. Mahle has a world-wide turnover of EU R 4 122 million and Dana EPG has a world-
wide turnover of EUR [300-800] million. More over, the turnover of Dana EPG does not 
exceed EUR 25 million in three Member States2. The notified concentration therefore 
does not have a Community dimension within  the meaning of Article 1 of the EC 
Merger Regulation.  
5. However, on December 11, 2006, the notifying party informed the Commission in a 
reasoned submission pursuant to Article 4(5)  of the EC Merger Regulation that the 
concentration was capable of being reviewed  under the national competition laws of at 
least three Member States, namely Aust ria, France, Germany, and Sweden, and 
requested that the case be referred to th e Commission. None of the Member States 
competent to examine the concentration indi cated its disagreement with the request for 
referral within the period laid down by the Merger Regulation.  
6. Therefore the concentration is deemed to  have a Community dimension pursuant to 
Article 4(5) of the EC Merger Regulation. 
IV. COMPETITIVE ASSESSMENT 
7. Both parties to the transaction are activ e in the supply of two specific engine 
components for internal combustion engines: connecting rod bearings and pistons rings. 
A connecting rod bearing is a metal shell that  joins the connecting rod to the crankshaft, 
and allows the connecting rod and the crankshaft  to move at different speeds, while also 
passing along the load generated by the piston in  order to turn the crankshaft (see Figure 
1). Piston rings are metallic engine parts that th at are inserted into the piston to preserve 
a gas-tight seal between the piston and the cylinder wall (see Figure 2). 
 
  
Figure 1: Connecting rod bearings  Figure 2: Piston rings (where the 
parties overlap) with piston head 
 
                                                 
2  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). 
3 PRODUCT MARKET DEFINITIONS  
8. The notifying party submits that piston rings  and bearings are distinct products, both 
used as components in internal combustion e ngines. For the definition of the relevant 
product markets, however, further subdivisions  should be made for each products, based 
on the sales channel and on size of the engines in which these products are used. 
OEM/OES versus IAM  
9. The notifying party proposes to consider the Independent AfterMarket (IAM) as a 
separate product market from OEM/OES markets3 This is in line with the Commission's 
decisional practice. The notifying party also proposes to consider a single market for 
Original Equipment Manufacturers (OEM), i.e. engine producers, and Original 
Equipment Suppliers (OES), i.e. the official repair network of the engine producers. The 
notifying party submits that OE customers do not distinguish between the purchases for 
OEM and for OES when negotiating supplies, that suppliers do not know what the final 
destination of the products are and that the products are identical for OEM and for OES. 
10. No respondent to the Commission's market inve stigation has disputed these claims (that 
is, the existence of separate IAM and OEM/ OES markets and the absence of distinction 
between OEM and OES purchases for the specific cases of bearings and piston rings).  
Light duty versus heavy duty bearings and piston rings  
11. Following the Commission's decisional practice4 in cases involving the supply of engine 
components, the parties distinguish be tween light duty and heavy duty markets5. Light 
duty engine parts are sold largely for vehicl es up to 6 tons (excluding very small ones, 
e.g. for motorcycles and lawn mowers). C onversely, heavy duty engine parts are sold 
largely for vehicles above 6 tons. 
12. Lack of demand side substitutability is cl ear in this case. As for supply side 
substitutability, the parties state that li ght duty engine components are typically 
produced in larger volumes in an automate d process, while heavy duty components are 
produced in smaller quantities. In addition, light duty and heavy duty components have different technical characteristics. 
13. Even if some competitors noted some de gree of supply-side substitutability between 
light duty and heavy duty bearings and pi ston rings, the market investigation has 
overwhelmingly confirmed the relevance of this distinction
6.  
Other possible distinctions  
                                                 
3  In OEM/OES markets, parts are sold to equipment manufacturers for assembly in new vehicles and for 
resale through their service network. In IAM market s, parts are sold to independent retailers for 
automotive spare parts and independent repair shops.  
4  See e.g. Case M. 1587 Dana/GKN.  
5  The distinction is also reflected in Dana EPG's information memorandum to potential acquirers. 
6  See majority of the answers to questions 4 and 6 in the Article 11 letters sent to customers and 
competitors. 
4 14. The Commission has investigated whether furt her distinctions would be relevant by 
asking OEM customers to evaluate the ability of their suppliers to meet fully their 
demand.  
15. In particular, as regards piston rings, the Commission investigated whether there was a 
good supply-side substitutability between diesel  and gasoline piston rings. Indeed, in a 
1999 Bundeskartelamt case Federal Mogul – Alcan Deutschland GmbH, the German 
Competition Authority considered that gasolin e and diesel piston rings were part of 
distinct product markets. 
16. Mahle submitted that such a distinction is no longer relevant. According to Mahle, the 
reason for the limited substitutability at the time the German Bundeskartellamt 
examined the merger between Federal Mogul  and Alcan in 1999 was linked to Federal's 
Mogul patent on the dominant CKS technol ogy used for producing light duty rings. 
Now Federal Mogul's patent has expired a nd new technologies like the PVD have been 
developed7. As a result, all piston rings producers today use their capacity to 
manufacture both gas and diesel rings. Ther e is now full supply-side substitutability 
between diesel and gasoline piston rings. 
17. All competitors and customers confirmed Mahle's claim and making a distinction 
between diesel and gasoline piston rings or any other distinction does not prove to be 
relevant for the competitive assessment8. 
Conclusion  
18. In conclusion, the relevant product markets identified in this case are the following: 
• Bearings for light duty applications to OEM/OES customers; 
• Bearings for heavy duty applications to OEM/OES customers; 
• Bearings for light duty applications to IAM customers; 
• Bearings for heavy duty applications to IAM customers; 
• Piston rings for light duty appli cations to OEM/OES customers; 
• Piston rings for heavy duty applications to OEM/OES customers; 
• Piston rings for light duty applications to IAM customers 
• Piston rings for heavy duty applications to IAM customers 
                                                 
7  CKS and PVS are two alternative coating technologies. They respectively stand for Chromium Ceramic 
Coating and Physical  Vapour Deposition. 
8  See question 8 in the article 11 letters sent to customers and competitors 
5 Geographic market definitions 
(i) OEM/OES markets 
19. As regards OEM/OES markets, the parties submit that the OEM/OES markets are least 
EEA-wide, which is in line with the Commission's decisional practise.  
20. The market investigation provided mixed elements on the geographical scope of the 
markets. As regards bearings, the demand seems to be somewhat different in Europe due to the existence of tougher regulation standard s, and the large number of diesel engines 
for light duty vehicles
9. Other specificities of European manufacture requirements 
would lie in their life-time expectation, the specific design of engines, and the power 
output of engines. Furthermore, some customers indicated that there still exists a home bias and that bearing manufactures tend to be  strong in their home markets. This would 
be due, as indicated below, to the difficulty to switch supplier and also to the existence 
of aftermarket sales which reinforces ties of car and truck manufacturers to their historic 
suppliers. 
21. As a result, regional suppliers and car /truck manufacturers have developed a 
relationship of trust and confidence that makes it difficult to enter a new geographic 
market. Moreover, a manufacturer willing to expand its presence in Europe would need 
a knowledgeable salesforce, a good distribution network, and gather market intelligence, 
which could also be obstacles for being an effective competitor. Overall, competitors that responded to the market test estimat ed that, for a competitor with no current 
operations in Europe, it would take up to 3 y ears to become an effective competitor in 
Europe. 
22. On the other hand, car/truck manufacturers ar e increasingly becoming global companies 
which value a worldwide presence of their s uppliers. In any case, the question whether 
the OEM/OES markets for light duty and heavy duty bearings are EEA-wide or larger in 
scope can remain open as it does not a lter the conclusions of the competitive 
assessment. 
23. As regards piston rings, the European dimens ion of the OEM seems to be even more 
manifest. Again, there is a more stringent re gulation, higher technical loads, more diesel 
engines, and a different quality standard in Europe. For example, superior noise 
reduction conditions have to be achieved w ith European engines and engines tend to 
have a smaller size and higher power. The historical ties between car/truck manufacturers and regional suppliers seem al so to be strong. Furthermore, several 
customers mentioned also the remoteness of plants from Europe (e.g. Brazil for Mahle) 
as an important weakness. However, the question whether the OEM/OES markets for 
light duty and heavy duty piston rings are EEA-w ide or larger in scope can remain open 
as it does not alter the conclusions of the competitive assessment. 
(ii) IAM markets 
24. Concerning IAM markets, in line with the Commission's decision practise, the parties 
submit that IAM markets are national in sc ope. The question whether the IAM markets 
                                                
 
9  While suppliers already present in Europe can provide bearings both for gas and diesel engines, the 
specificities of the European demand means that would a potential entrant would have to adapt its production process to enter the market. 
6 for light duty and heavy duty b earings and piston rings are national or wider in scope 
can remain open as it does not alter the conclusions of the competitive assessment. 
a. ASSESSMENT  
(i) OEM/OES markets 
Light Duty Bearings  
25. The proposed transaction does not raise a ny competition concerns on the market for 
light duty bearings since the overlap is limited to [<5]% at the EEA level (and the combined market share would be [15-25]%;  Federal Mogul, Kolbenshmidt, and Miba 
have respectively [35-45]%, [15-25]%, and [5 -15]% of the market).  At the worldwide 
level, the market is not affected. 
Heavy Duty Bearings 
 
26. In the EEA market for heavy duty bearings, the transaction would reinforce the number 
two position currently held by Dana EPG behing market leader Federal Mogul10:   
2005 data Mahle Dana 
EPG Combined Federal 
Mogul Kolbenschmidt Miba Others 
EEA [<5]% [30-40]% [35-45]% [40-50]% [5-15]% [<5]% [<5]% 
 
27. The parties submitted that no anticompetitive effect would result from the merger, 
considering the relatively small overlaps, th e strength of the market leader Federal 
Mogul, the competitive pressure exerted by other, smaller competitors coming from 
Japan, China and India, and the considerable buyer power of customers. 
28. In the market investigation, car and tr uck manufacturers explained that changing 
suppliers is a very heavy and expansive pr ocess that can take several years. The 
qualification process for a new supplier involves discussion on the technical characteristics of the products, as well as extensive testing first in the laboratory and in the actual production process. As a result, car and truck manufacturers prefer to establish a relationship and work with a rela tively small number of suppliers (3-4). They 
choose their suppliers based on the price, quality, and technology of products. 
29. However, the market investigation revealed  that most car and truck manufacturers do 
not consider Mahle and Dana EPG as close competitors. Indeed, on the market, Federal 
Mogul is considered as the technological leader, which keeps its edge through important R&D investment and is able to supply a wide  range of products. It appears that Dana 
EPG has a comparable positioning. By contrast , according to the market investigation, 
Mahle markets less quality oriented products which come from its production facility in 
Brazil.  
30. Thus, the merger removes a weak competito r from the market, and the new entity will 
still face the strong competition of Federal Mogul, whereas Kolbenschmidt remains a 
                                                
 
10  2005 data provided by Mahle. 
7 sizable competitor. It therefore appears unlik ely that the proposed transaction will give 
rise to non-coordinated effects. 
31. Accordingly, only one customer expressed f ears that the merger would bring about 
higher prices. Other customers did not expr ess strong concerns, and some of them 
explained that the takeover of Dana EPG w ould make the latter a more reliable partner 
as one of its current weaknesses is its financial instability.  
32. As regards possible coordinated effects, the market investigation revealed that markets 
cannot be considered as transparent. Indee d, while the successful bidder of tenders is 
generally public, pricing remains unknown. Furthe rmore, as explained above, the market 
is somewhat differentiated with technologi cal leaders such as Federal Mogul. These 
elements—lack of transparency and lack of product homogeneity—make  it difficult for suppliers of heavy duty bearings to r each a common understanding on the terms of 
coordination and to monitor such coordination.  Thus, coordinated effect are unlikely to 
arise as a result of the market investigation. 
33. If the markets were to be considered worl dwide in scope, the position of the new entity 
would be weaker (Mahle: [5-15]%; Dana EPG: [10-20]%; Daido:  [30-40]%; Federal 
Mogul: [15-25]%; Taiho: [10-20]%; Kolbensc hmidt: [<5]%; others: [<5]%) as it would 
be limited to [20-30]%. In particular, it would face the competition of the Japanese 
suppliers such as Daido and Taiho in add ition to that of Federal Mogul. Thus, the 
proposed transaction is unlikely to signi ficantly impede effective competition on a 
worldwide basis.  
Light duty and heavy duty piston rings
 
34. On other EEA markets for piston rings, the proposed transaction brings about limited 
changes as can be seen from the following table11: 
2005 data MAHLE Dana 
EPG Combine
d Federal 
Mogul Riken NPR Others 
Light duty 
piston rings [10-20]% [0-10]% [15-25]% [60-70]% [0-10]% [<5]% [<5]% 
Heavy duty 
piston rings [0-10]% [10-20]% [15-25]% [55-65]% [5-15]% [<5]% [0-10]% 
 
35. Thus, non-coordinated effects are very unlikel y as a result of the merger. Coordinated 
effects are also unlikely due to the lack of transparency on the market (pricing) and the 
different market positioning of market player s (for example, Federal Mogul is stronger 
in piston rings for diesel engines than Mahle and Dana EPG).  
36. In addition, as explained by the notifying pa rty, that there have been several new 
entrants on the market, notably from Japan (Riken, NPR), as well as from China and 
India. It appears that the Czech company Bachibuzuk is also newly active on the market. 
37. This analysis holds at the worldwide leve l. For light duty piston rings, the new entity 
would hold [20-30]% of the market (Mahle: [5-15]%; Dana EPG: [10-20]%) and would 
face competition from Federal Mogul [35-45]% and Japanese manufacturers (Riken ([5-
                                                 
11  2005 data provided by Mahle 
8 15]%), TPR ([5-15]%), NPR ([5-15]%)). As fo r heavy duty piston rings, the new entity 
would only hold [10-20]% of the market a nd would face competition from Federal 
Mongol ([25-35]%) and Japanese manufactur ers (Riken ([20-30]%), TPR ([10-20]%), 
NPR ([10-20]%)). 
38. For these reasons, the proposed transaction is very unlikely to significantly impede 
effective competition on the markets for pi ston rings. In fact, no customers raised 
concerns specific to these markets and some of them even expect a boost to innovation.  
 (ii) IAM  
39. The only national IAM affected would be the French light duty bearing market and the 
French light duty piston rings markets. Eu ropean IAM markets for engine components 
are micro-markets compared to the OEM/OE S markets: the estimated market size in 
France in 2005 was € 1.4 million for light duty bearings and € 3 million for light duty 
piston rings.  
40. The transaction would lead to combine mark et shares of [30-40] % (Mahle [25-35]%, 
Dana EPG [0-10]%, market leader is Fe deral Mogul with [40-50]%) for light duty 
bearings. However, Dana EPG's sales in th e French market are not made to French 
customers (i.e. repair shops and mechanics operating in France) but to exporters that 
resell bearings in the Maghreb. Thus, Dana EPG is a niche player on the market and its peculiar market positioning makes it unlikely th at non-coordinated effects will arise as a 
result of the merger. As for light duty pist on rings, the merger will barely bring about 
any change and the combined market shar e would be limited to [10-20]% (Mahle [10-
20]%, Dana EPG [<5]%, market leader Federal Mogul with [60-70]%). 
41. In view of these elements, the proposed tr ansaction does not give rise to competition 
concerns on the French IAM markets for light duty bearings and piston rings.  
42. No competition concerns would arise in hypothetical EEA-wide IAM markets. As for 
light duty bearings, in all European countri es other than France, Mahle's position is 
clearly below 15% and Dana EPG is hardly present. Similarly, Mahle's position in light 
duty piston rings is below 15% in all EEA countries but France, and Dana EPG is hardly present in these countries. 
VI. CONCLUSION 
43. For the above reasons, the Commission has d ecided not to oppose the notified operation 
and to declare it compatible with the co mmon market and with the EEA Agreement. 
This decision is adopted in application of Article 6(1)(b) of Council Regulation (EC) No 139/2004. 
For the Commission 
signed Neelie KROES Member of the Commission