COMMISSION DECISION of 29/06/2000 declaring a concentration to be compatible with the common market (Case No IV/M.1998 - FORD/LANDROVER) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

Brussels, 29.06.2000

To the notifying party

Dear Sirs,

Subject: Case No COMP/M.1998-Ford/LandRover

Notification of 25.05.2000 pursuant to Article 4 of Council Regulation No 4064/89

1. On 25.05.2000 the Commission received a notification of the proposed acquisition by the U.S. Company Ford Motor Company ('Ford') of the Land Rover business from the German car manufacturer BMW.

2. After examination of the notification, the Commission has concluded that the notified concentration falls within the scope of 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 AND THE OPERATION

3. Ford is acquiring the Land Rover business from BMW. Land Rover manufactures only special utility four-wheel-drive passenger vehicles, the so-called 'J' passenger car segment.

II CONCENTRATION

4. Ford acquires control of the whole of Land Rover and therefore the transaction constitutes a concentration within Article 3(1)(b) of the Merger Regulation.

III COMMUNITY DIMENSION

5. Ford and Land Rover have a combined aggregate worldwide turnover of more than EUR 5 billion [1]. Each of them have a Community-wide turnover in excess of EUR 250 million, but 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. It does not constitute a cooperation case under the EEA Agreement, pursuant to Article 57 of that agreement.

[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, p25). 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.

IV COMPETITIVE ASSESSMENT

6. In previous passenger vehicle cases the Commission has left open both product and geographic market definitions, the narrowest possible definition being separate segments in individual countries. In the present case the only country in which combined shares in the 'J' segment will exceed 20% is the U.K. where the post-transaction share will be [35-40%] (Land Rover [35-40%], Ford [0-5%]). At the EEA level combined 'J' segment shares would be [15-20%] (Land Rover [15-20%], Ford [0-5%]).

7. The increment in market shares is therefore marginal in view of Ford's limited presence in the 'J' segment. The 'J' segment is very competitive ; in the U.K. strong competitors include Honda([10-15%]), DaimlerChrysler ([10-15%]), Suzuki ([5-10%]), Toyota([10-15%]), etc.

Conclusion

8. In view of the above the operation will not create or strengthen a dominant position.

V ANCILLARY RESTRAINTS

9. Land Rover and BMW will continue to supply certain goods and services to each other for a transitional period of time:

BMW will continue to supply certain components (until 2003 at the latest) and certain stamping services (until 2008 at the latest) ;

BMW will provide certain development engineering services for a maximum of 18 months ;

BMW will provide certain administrative services until 08.11. 2000 ;

BMW will provide certain IT services for one year ;

BMW will supply certain sales support services for a maximum of 2 years ;

Land Rover will continue to supply Rover 25 and 45 model engines until 2002.

10. The objective of these supply agreements is to ensure, for a transitional period, the continuity of the Land Rover and BMW businesses, and as such they are directly related to and indispensable to the implementation of the concentration.

11. BMW will grant to Land Rover a non-exclusive royalty-free licence to use , in connection with Land Rover's business, intellectual property rights relating to technology used on both Land Rover and Rover (BMW) vehicles. The objective of this licence is to ensure that Land Rover is able to continue its present production programme and its development of a new model which is nearing completion ; in so far it may be restrictive of competition, this licence is directly related to and indispensable to the implementation of the concentration, since it is aimed at guaranteeing the transfer to Ford the full value of the business acquired.

12. Land Rover will grant to BMW a non-exclusive royalty-free licence to use, in connection with BMW's business, intellectual property rights relating to technology used on both Land Rover and a new special utility vehicle. The objective of this licence is to ensure that BMW is able to continue its development of the new model; in so far as it may be restrictive of competition, this licence is directly related to and indispensable to the implementation of the concentration.

VI CONCLUSION

13. 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 Mario Monti

Member of the Commission