COMMISSION DECISION of 03/09/1998 declaring a concentration to be compatible with the common market (Case No IV/M.1276 - NEC / PBN) according to Council Regulation (EEC) No 4064/89

(Only the English text is authentic).

The paper version of the decision is available through the sales offices of the Office of Official Publications of the European Communities.

PUBLIC VERSION

MERGER PROCEDURE

ARTICLE 6(1)(b) DECISION

To the notifying parties

Dear Sirs,

Subject: Case No IV/M.1276-NEC/PBN

Notification of 04.08.1998 pursuant to Article 4 of Council Regulation No 4064/89

1. On 04.08.1998 the Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EEC) No 4064/89[OJ L 395, 30.12.1989 p.1 ; corrected version OJ L 257 of 21.9.1990, p.13, as last amended by Regulation (EC) No 1310/97, OJ L 180, 9.7.1997, p.1, corrigendum in OJ L 40, 13.2.1998, p.17.] by which NEC CORPORATION (« NEC ») acquires, within the meaning of Article 3 (1) (b), control of PACKARD BELL NEC, Inc. (« PBN »).

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

I THE PARTIES AND THE OPERATION

3. NEC and PBN are active in the manufacturing and in the distribution of computers.

4. The notified operation continues investments of NEC in PBN which started respectively in 1993 and 1995. At the time PBN was called Packard Bell Electronics Inc. ("PB"). To complete the joint image Packard Bell's name was changed to PBN. The current structure of PBN shows three different groups of shareholders: on the one hand, there are four PB/PBN founders holding together 38, 4% % of the voting capital, on the other hand, NEC and Bull hold respectively 49,0 % and 12,6 % of the voting capital. The acquisition of these participations by NEC in the past has been considered by the services of the Commission falling outside the scope of the Merger Regulation[See Commission decision on 06.02.1998, case No IV/M.1095-NEC/BULL/PBN ].

5. The current proposed operation involves an increase of NEC's shareholding in PBN's voting capital from 49 % to 52.8% in recognition of financial support brought to PBN. Hence, Bull's share will decrease to 11,6 % and the founders' share will decrease to 35,4%.

II THE CONCENTRATION

6. The Commission decided on 06.02.1998 in case No IV/M.1095-NEC/BULL/PBN that, in the absence on any voting arrangement within PBN, the existence of a situation of control in PBN was not proved. As a consequence of the present operation NEC acquires a majority of the voting shareholding in PBN and a majority in the Board of Directors of PBN with five out of nine members. This increase in voting power together with NEC's majority in the Board will give NEC sole control of PBN within the meaning of Article 3 of the Merger Regulation. The operation is a concentration according to Article 3 (1) (b) of the Merger Regulation.

III COMMUNITY DIMENSION

7. NEC and PBN have a combined aggregate world-wide turnover in excess of ECU 5,000 million ( NEC : ECU 35,950 million ; PBN : ECU 3,436 million). The Community-wide turnover of each of NEC and PBN exceeds 250 million (NEC : ECU [Deleted - business secret] million ; PBN : ECU [Deleted - business secret] million). The undertakings concerned do not achieve more than two-thirds of Community-wide turnover in any one EC Member State. The concentration therefore has a community dimension.

IV COMPATIBILITY WITH THE COMMON MARKET

A. RELEVANT PRODUCT/GEOGRAPHIC MARKET

8. Personal computers (PCs) are general purpose single user computer systems targeted at business/professional, scientific/technical, home or educational use. It cannot be excluded that PCs can be differentiated on the basis of either individual system specifications or other functional characteristics. The main categories of single user PCs are: a) AC-Portables; b) Battery-Laptops; c) Desktop/Towers and Monitors; d) Notebooks; e) Smaller Notebooks (a smaller lighhter category than Notebooks).

9. Nevertheless, for the purposes of this case it is not necessary to further delianeate the relevant product market because in all alternative market definitions considered, effective competition would not be significantly impeded in the EEA or any substantial part of that area.

10. The notifying party states that the relevant geographic market is Europe. The Commission has established in previous cases that given the small transport costs relative to price, the similarity of consumer preferences, product specifications and patterns of sales of major manufacturers throughout EEA countries, the relevant geographic market appears to be at least EEA-wide. However, for the purposes of this case it is not necessary to examine further the extent of the relevant geographic market because even on the basis of a wider geographic market, effective competition would not be significantly impeded in the EEA or any substantial part of that area.

B. ASSESSMENT

11. In any event the parties combined market share is below [Deleted - business secret: below 10%], even on the narrowest product market/category of single user PCs defined at European level. There are a significant number of competitors in Europe such as Compaq, IBM, Hewlett-Packard, Dell, SNI, Vobis, Fujitsu, Toshiba and Apple. Consequently the proposed concentration does not create or strengthen a dominant position as a result of which effective competition would be significantly impeded in the EEA or any substantial part of that area.

V CONCLUSION

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

For the Commission,