Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE  
Europese Commissie, DG COMP MERG ER REGISTRY, 1049 Brussel,  BELGIË 
 
Tel: +32 229-91111. Fax: +32 229-64301. E-mail: COMP-MERGER-REGISTRY@ec.europa.eu .  EUROPEAN COMMISSION 
Brussels, 1.10.2018 
C(2018) 6508 final 
 
 
 
To the notifying party  
 
 
Subject: Case M.8985 - Boeing / KLX 
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 29.8.2018, the European Commission received notification of a proposed 
concentration pursuant to Article 4 of  the Merger Regulation by which The 
Boeing Company ('Boeing', United States ) acquires, within the meaning of 
Article 3(1)(b) of that Re gulation, control of the w hole of KLX Inc. ('KLX', 
United States) by way of purchase of shares ('Transaction').3 Boeing and KLX  are 
designated hereinafter as the 'Parties'. 
1. THE PARTIES AND THE OPERATION  
(2) Boeing is a US-based company, active in the aircraft, defence and space 
industries and related services. Boeing is also a supplier of security systems and 
provider of aftermarket services fo r the aerospace market, including the 
distribution of aerospace parts and chemicals.  
                                                 
1  OJ L 24, 29.1.2004, p. 1 (the 'Merger Regulation').  With effect from 1 D ecember 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 ma rket'. 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 314 , 06.09.2018 , p. 14. 
PUBLIC VERSION 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information omitted has been replaced by ranges of figures or a general description. 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) KLX, also based in the US, is active in  the distribution of small aerospace parts 
and chemicals. 
(4) The envisaged Transaction concerns the acquisition of all shares in KLX by 
Boeing. The proposed Transaction constitute s a concentration within the meaning 
of Article 3(1)(b) of the Merger Regulation. 
2. EU DIMENSION  
(5) The undertakings concerned have a combin ed aggregate world-wide turnover of 
more than EUR 5 000 million4 (Boeing: […], KLX: […], combined: […]). Each 
of them has an EU-wide turnover in excess of EUR 250 million (Boeing: […], 
KLX: […]), but they do not achieve more than two-thirds of their aggregate EU-
wide turnover within one and the same  Member State. The notified operation 
therefore has an EU dimension pursuant to Article 1(2) of the Merger Regulation. 
3. MARKET DEFINITION  
3.1. Introduction 
(6) The Transaction primarily concerns th e distribution of aerospace parts and 
chemicals to aircraft manufact urers and the aftermarket.  
(7) Aerospace parts and chemicals includes se veral and diversif ied categories of 
products required as inputs across all phases of a lifecy cle of an aircraft. These 
products can be divided into four broa d categories: A-class parts (high-value 
repairable parts), B-class parts (parts that can be economically repaired when 
damaged), C-class parts (low value parts that are not repaire d, but replaced when 
damaged), and aerospace chemicals (liq uids, composite materials and other 
consumables used for the manufacture, repair  and general upkeep of an aircraft).  
(8) In light of the activities of the Parties, as explai ned below under 4.1, for the 
purpose of the assessment of the proposed  Transaction, only C-class parts, in 
particular aerospace fasteners and aerospace chemicals are relevant. 
(9) Fasteners are small C-class parts, such as  bolts, nuts and screws, used to connect 
all the different parts of an aircraft together in pr imary structural areas, secondary 
structure, pressurized and non- pressurized applications, an d to transfer loads from 
one part to another. Most fastener s are manufactured according to industry 
standards ('standard fasteners'), while other fasteners are produced according to specifications developed by manufacturers  and aircraft producers who hold the 
design rights ('proprietary fasteners'). 
(10) The distribution of aerospace small parts and consumables takes place through 
different channels. They are distributed either directly by parts manufacturers, 
independent distributors, or through brokers. The cu stomers' preference about 
which channel to use is highly dependent on the quantity required, lead time and desire for value-add services. Manuf acturers often require minimum order 
quantities, while distributors are able to provide smaller quantities, have shorter 
                                                 
4  Turnover calculated in accordance with Article 5 of the Merger Regulation.  
3 delivery times as they have product stocks and can also provide additional 
services like kitting. In most cases, customers rely on multiple distribution channels and they procure the needed  aerospace small parts via competitive 
tender offers, long term contracts, or ad-hoc quotes. 
(11) The demand for small aerospace parts depends both on the demand for new 
aerospace equipment and on the demand for replacement parts during the life 
cycle of an aircraft. The customer base is therefore diversified and encompasses 
original equipment manufacturers ('OEMs') and aircraft manufacturers, as well as 
the so-called 'aftermarket', e.g. airlin es, maintenance, repair and overhaul 
operators ('MROs') and fixed based operators. 
3.2. Product Market Definition 
3.2.1.  Commission's Precedents 
Upstream market: distribution of  aerospace parts and chemicals 
(12) In a previous decision, the Commission considered that the distribution of 
aerospace parts could be divided into di fferent submarkets, such as, on the one 
hand, the distribution of large aerosp ace parts by airframe and component 
manufacturers, and, on the other hand, the distribution of small parts, requiring 
regular and quick replacement, by indepe ndent distributors. Alternative markets 
segmentations were also considered for parts dedicated for large commercial aircraft and for general aviation/regiona l aircraft and for commercial and for 
military aircraft. However, the product market definition was ultimately left 
open.
5 
(13) In a more recent decision, the Commission al so considered that the market for the 
supply of aerospace parts could be se gmented based on the difference between 
customers, i.e.: OEMs and aircraft manuf acturers for original parts and MROs or 
airlines for spare parts.6 
(14) The Commission did not address in any pr evious decision the distribution of 
aerospace chemicals. 
Downstream markets: aircraft manufacturing and aftermarkets  
(15) In relation to aircraft manufacturing, Commission pr ecedents have generally 
differentiated the following main categorie s of aircraft: commercial aircraft, 
military aircraft, helicopters and general aviation aircraft.7 Within commercial 
aircraft the precedents further diff erentiated between three segments:8 large 
commercial aircraft, regional aircraft a nd business/corporate jets. As to large 
commercial aircraft, a further distinc tion was considered between narrow-body 
(or single-aisle) aircraft, and wide-body (or twin-aisle) aircraft. In its most recent 
decision,9 the Commission also considered that, in light of the introduction of 
                                                 
5  Commission Decision in Case M.4241, Boeing/Aviall , para. 10. 
6  Commission Decision in Case M.6410, UTC/Goodrich , paras 192-195. 
7   Case M.1601, Allied Signal / Honeywell , para 11. 
8  Case IV/M.877, Boeing / McDonnell Douglas , paras 15 and 16; Case M.1601, Allied Signal / 
Honeywell , paragraph 13; Case M.2220, General Electric / Honeywell , para 10. 
9  Commission Decisions in Case M.8858, Boeing/Safran/JV , para 14. 
4 additional aircraft, the previous di stinction between narrow-body large 
commercial aircraft and regional aircraft may be blurred, but the sub-segmentation of the product market for commercial aircraft was ultimately left open. 
(16) The Commission’s decisional practice has al so differentiated four main categories 
of aviation MRO services base d on the part of the aircra ft to be serviced and the 
level of service required: line maintenance, heavy maintenance, engine maintenance and component maintenan ce (here referred to as “component 
MRO”). The Commission also considered that these markets might be subdivided 
into separate markets accordi ng to the type of the airc raft, distinguishing between 
commercial aviation on the one hand and business aviation on the other hand, but did not reach a conclusion as regards market definition.
 10 
3.2.2.  The Parties' view 
(17) As regards the upstream market, the Parties submit that it is appropriate to 
consider an overall market including dist ribution of all cate gories of aerospace 
parts. In their view, this product market includes also the distribution of aerospace 
chemicals. This market may be furthe r segmented between larger and more 
complex parts and small spare parts. Further, given that customers […], the Parties agree with the approach in Boeing/Aviall
11 not to distinguish between 
different categories of spare parts. 
(18) The Parties further submit that at the di stribution level the market should not be 
further segmented according to customer categories. From the demand-side, the products are functionally interchangeable , there are similar product and service 
requirements across all categor ies and pricing is also similar. From the supply-
side, most manufacturers and distributors are able to serve all customer 
categories. However, the Parties acknowle dge that for some products it may be 
relevant to distinguish between supply to  OEMs (i.e. first install) and supply to 
the aftermarket (where both Parties are active), as they request different services. 
(19) As concerns the downstream market, the Parties aknowledge the previous 
segmentation between commercial aircraft, military aircraft, helicopters and general aviation aircraft.  
(20) Further, the Parties note that there are th ree key categories of market participants 
in the aftermarket, namely MROs, FBOs and airlines, but submit that the aftermarket should not be segmented accordingly. 
3.2.3.  Commission's assessment and conclusion 
(21) As concerns the upstream market, re spondents to the mark et investigation 
explained that they procure aerosp ace parts both from distributors and 
manufacturers, stressing that while th e same products can be purchased through 
both channels, distributors are able to offer additional services.
12 Furthermore, 
respondents suggested that th e relevant market may encompass the distribution of 
                                                 
10  Commission Decisions in Case M.6410, UTC/Goodrich , paras 174-181, and in Case M.8658, 
UTC/Rockwell , paras 129-138. 
11  Commission Decision in Case M.4241, Boeing/Aviall , para. 10. 
12  Non-confidential minutes of a phone call with an OEM on 6 August 2018 
5 all aerospace parts or at least broad cat egories of aerospace parts and aerospace 
chemicals. However, one respondent highlighted that about 78% of the 
distribution takes place through distributor s exclusively dedicated to fasteners.13 
Market participants also did not consider any further sub-segmentation on the basis of narrower categories  of products (e.g. standard and proprietary fasteners, 
different types of fasteners).
14 
(22) As regards a segmentation of the distribution market for aerospace small parts and 
chemicals based on the type of aircraft fo r which the parts are dedicated, or based 
on the end customer, the market inves tigation confirmed that a segmentation 
might only be justified on the basis of th e end customer and such between OEMs 
(first install) and the aftermarket (spare  parts), but not furt her in relation to 
different subsegments of the aftermarket.15 
(23) The Commission therefore considers that th e relevant product market may include 
the distribution via all channels of all small aerospace parts and chemicals or of 
categories of products, such as fastener s, while a narrower segmentation would 
not be appropriate.  
(24) In any event, for the purposes of the present decision, the exact product market 
definition for the distribution of aeros pace small parts and aerospace chemicals 
can be left open as no seri ous doubts arise under either of the alternative market 
definitions.  
(25) As regards the downstream markets, the Commission considers it appropriate to 
assess the aircraft manufacturing market in  line with the segmentation followed in 
its precedents described above at paragraph (15), while the exact sub-segmentation of the product market for comm ercial aircraft can be left open in 
this case as no serious doubts arise unde r either of the a lternative market 
definitions.  
(26) As regards aftermarkets, one respondent to the market investigation indicated that 
it would not be appropriate to segment th e MRO services as described above at 
paragraph (16)
16, while the market investigation as a whole was not conclusive on 
the relevant segmentations.  
(27) In any case, as regards aftermarkets, the Commission considers that, for the 
purposes of the present decision, the exact product market definition can be left open as far as it concerns any possible distinction based on the level of service required, the part of the aircraft to be se rviced or to be replaced, or the type of 
aircraft concerned, as no serious doubts arise under eith er of the alternative 
market definitions. 
                                                 
13  Non-confidential minutes of a phone call with a distributor on 14 September 2018. 
14  Non-confidential minutes of a phone call with two distributors on 23 August 2018 and 14 
September 2018. 
15  Non-confidential minutes of a phone call with two distributors on 23 August 2018 and 14 
September 2018. 
16  Non-confidential minutes of a phone call with an independent MRO on 11 September 2018. 
6 3.3. Geographic market definition 
3.3.1.  Commission's precedents 
(28) In previous decisions, the Commissi on took the view that the appropriate 
geographic market definition for distributi on of aerospace parts is at least EEA-
wide, if not worldwide. However, the precise geographic market definition was 
ultimately left open.17  
(29) The Commission also considered in its precedents18 that the downstream markets, 
both for aircraft manufacturing and afte rmarket services, are worldwide in 
geographic scope, without ultimately reaching a final conclusion.  
3.3.2.  Parties’ views 
(30) The Parties submit that the market for the distribution of small aerospace parts is 
at least EEA-wide and likely global. 
(31) In line with the Commission’s precedents , the Parties submit market shares for 
the downstream market at worldwide level. 
3.3.3.  Commission’s assessment and conclusion 
(32) As regards the upstream market, the mark et investigation provided indications 
that both manufacturers and independent  distributors of aerospace parts supply 
world-wide.19 For aerospace chemicals, the respondents indicated similarly that 
the market is worldwide or at least EEA-wide.20 
(33) As regards the downstream markets, the Commission considers it appropriate to 
assess the aircraft manufacturing market and the aftermarkets as worldwide in 
line with the segmentation followed in established precedents. 
(34) Accordingly, the Commission considers, in line with its precedents, that the 
relevant markets are worldwide or at least EEA-wide. For the purpose of this 
decision, the precise geographic market defi nition can be left open as no serious 
doubts arise under either of the a lternative market definitions. 
4. COMPETITIVE ASSESSMENT  
4.1. Activities of the Parties and relevant overlaps 
(35) Both parties are active in the distributi on of small aerospace parts and aerospace 
chemicals. Boeing is also active downstream  as an aircraft ma nufacturer and an 
MRO. 
                                                 
17  Commission Decision in Case M.4241, Boeing/Aviall , paras 11-12. 
18  Commission Decisions in Case M.2220, General Electric/Honeywell , paras 10-34; Case M.1601, 
Allied Signal/Honeywell , para. 13; Case M.6410, UTC/Goodrich , recitals 196-200, Case M.8658, 
UTC/Rockwell , paras 208-211. 
19  Non confidential version of the minutes of the phone call with an OEM on 6 August 2018.  
20  Non confidential version of the minutes of the phone call with a manufacturer on 23 August 2018; 
Non confidential version of the minutes of th e phone call with an airline on 27 July 2018. 
7 (36) Boeing distributes aerospace parts thr ough two different channels. Boeing’s 
Global Services business unit ('Boeing Sp ares’) primarily sells Boeing and third-
party proprietary parts as well as a sma ll amount of industry standard parts, to 
aftermarket customers. In addition, in 2006, Boeing acquired Aviall Inc. ('Aviall'), a distributor of aerospace parts and aerospace  chemicals, active also in the sale of 
large aerospace parts such as engine components. 
(37) Further, Boeing set up a capti ve distributor, under the name 'Boeing Aggregated 
Standards Network ('BASN'), that s upplies Boeing approved fasteners ('BAC 
fasteners') to Boeing internally and to  OEM (component) suppliers for use in 
manufacturing components for Boeing aircraft.  
(38) Boeing operates on the  downstream market for aircra ft manufacturing and it 
procures parts essentially from its OE M suppliers, which may supply it with the 
final assembled aircraft part or the individual component. Furthermore, Boeing 
has also a […] activity on the aftermarket as an MRO.  
(39) KLX is a distributor of small aerospace parts and aerospace chemicals, offering a 
range of services such as logistics and management kitting. The two most 
important categories of products sold by KLX are fasteners, which make-up 
[60-70]% of its total turnover, and ae rospace chemicals accounting for [10-20]% 
of its turnover.
21  
(40) In light of the activities of the Parties, the Transaction gives rise to limited 
horizontal overlaps on the distribution of  small aerospace parts and aerospace 
chemicals, which do not result in any a ffected markets. Further, from the 
information provided by the Parties, it follows that the sub-categories of small parts where the Parties mainly  overlap are: fasteners, lighting, electrical products 
and bearings. 
(41) The Transaction also leads to vertical  links between the upstream distribution 
activities of KLX and Boeing's activities dow nstream as an aircraft manufacturer 
and an MRO. 
4.2. Market structure 
4.2.1.  Upstream market: distribution of small aerospace parts and aerospace chemicals 
(42) On the market for the distribution of small aerospace parts and aerospace 
chemicals, the Parties have a post-merger  combined share of [5-10%] worldwide 
and [5-10%] EEA-wide (Boeing: [0-5%] WW and below [0-5%] EEA, KLX: [5-10%] WW and [5-10% ] EEA). Table 1 below reports the market shares 
of the Parties on the market for the dist ribution of narrower categories of small 
aerospace parts and chemicals where the Tr ansaction would give rise to overlaps 
between the Parties. Table 2 reports esti mated market shares for the distribution 
of fasteners based on end-customers. 
                                                 
21  Form CO, Table 2 at p. 5. 
8 Table 1 – Market shares for the distribution aerospace fasteners, aerospace 
lightings and aerospace chemic als, based on value (2017) 
 Aerospace 
Fasteners  Aerospace 
Chemicals  Aerospace 
Lighting  Aerospace 
Electrical Products  Aerospace 
Bearings  
Boeing  [0-5]% WW 
[0-5]% EEA [0-5]% WW 
[0-5]% EEA[5-10]% WW  
[0-5]% EEA<[5-10]% WW 
<[5-10]% EEA <[5-10]% WW 
<[5-10]% EEA 
KLX  [10-20]% WW 
[10-20]% EEA [0-5]% WW 
[0-5]% EEA [0-5]% WW 
[0-5]% EEA<[5-10]% WW 
<[5-10]% EEA <[5-10]% WW 
<[5-10]% EEA 
Combined [10-20]% WW 
[10-20]% EEA [0-5]% WW 
[0-5]% EEA [5-10]% WW 
[0-5]% EEA <[10-20]% WW 
<[10-20]% EEA <[10-20]% WW 
<[10-20]% EEA 
Source: Estimates of the Parties, Form CO Table 4 at p. 7. 
Table 2 – Market shares for the distribut ion of aerospace fast eners to OEMs and 
the aftermarket, based on value (2017) 
 OEMs Aftermarket 
Boeing (Aviall and 
Boeing Spares) <[0-5]% WW 
<[0-5]% EEA [0-5]% WW 
[0-5]% EEA 
KLX [10-20]% WW 
[10-20]% EEA [5-10]% WW 
[5-10]% EEA 
Combined [10-20]% WW 
[10-20]% EEA [5-10]% WW 
[10-20]% EEA 
Wesco [10-20]% WW [10-20]% EEA [0-5]% WW 
[0-5]% EEA 
Pattonair [5-10]% WW 
[5-10]% EEA [5-10]% WW 
[0-5]% EEA 
Source: estimates of the Parties, Form CO Annex 7B 
(43) As concerns the competitive landscape, according to the information provided by 
the Parties and respondents to the market investigation,22 the distribution market 
is highly fragmented. KLX is the market le ader for fasteners, followed by Wesco, 
Pattonair and Aligne Aerospace. 
4.2.2.  Downstream markets 
(44) Boeing’s estimated worldwide market share for 2017 in the market for the 
manufacture of large commercial aircraft is [40-50]%. In the segment of large 
commercial aircraft above 90 seats, Boeing held market shares of [50-60]%. If 
regional aircraft with less than 90 seat s are included in the market definition, 
Boeing’s market share amounts to [40-50]%.  In the segment of large commercial 
aircraft of more than 120 seats, Boei ng's market share amounts to [50-60]%. 
Finally, in the sub-segment of wide-body commercial aircraft of 200 seats or 
more, Boeing held a market share of [50-60]%.23 Therefore the transaction results 
in vertically affected markets. 24 
                                                 
22  Non-confidential version of the minutes of the phone call with a distributor on 23 August 2018. 
23  Estimates of the Parties, in terms of number of aircraft deliveries in 2017. See Response by Parties 
to RFI of 20 September 2018. 
24  Boeing is also active in the manufacture of military aircraft, but its share in this segment is under 
30%, and it has a limited share in the manufacture of business aviation aircraft. The market shares 
 
9 (45) As regards aftermarkets, Boeing has an es timated market share of [0-5]% on the 
overall global aftermarket, and below [5-10]% under any conceivable product or 
geographic segmentation25 thereof.  
4.3. Assessment of horizontal effects 
4.3.1.  Parties’ arguments 
(46) The Parties submit that, for the distribution of small aerospace parts, their 
combined market shares on an EEA and worldwide basis are modest and do not 
result in a horizontally affected market . The same applies even considering a 
narrower level, at the specific product categories where the Parties’ distribution activities overlap.  
(47) Further, the merged entity would be constrained by the numerous other 
competitors present in the small aerosp ace parts distribution segment as well as 
the narrower distribution segments for each of the aforementioned product categories.  
4.3.2.  Commission’s assessment 
(48) The Commission observes that, according to the available information, with 
respect to the distribution of small aerospace parts (including aerospace 
chemicals) on a worldwide market as well as EEA-wide, the estimated combined market shares of the parties are limited (below [10-20]%). The combined market 
shares for any narrower overlapping cate gory are also below [5-10]%. Only on 
the market for the distribution of fast eners to OEMs, the estimated combined 
EEA market shares are close to [20-30]%. 
(49) In light of the comments received by market  participants during the investigation, 
the Commission has carefully examined whether it is likely that, further to the Transaction, the Parties woul d be able to raise prices for aerospace fasteners. 
(50) From the evidence collected during the market investigation
26, it results that KLX 
is in a leading position on the distribution ma rket, at least, for aerospace fasteners, 
where it can offer a wide product portfo lio and very competitive services.  
(51) However, the Transaction is not likel y to remove an important competitive 
constraint. The addition of Boeing ma rket share is very small and KLX and 
Boeing are not close competitors.27 Their customers’ base is different, as KLX is 
more dedicated to OEMs while Boeing is focused on the aftermarket. Further, KLX distributes predominantly standard fa steners, Boeing proprietary fasteners. 
(52) The market shares suggest that the merg ed entity would continue facing strong 
competition from small parts manufacturers, independent distributors and brokers. 
                                                                                                                                                 
are calculated in in terms of deliveries: estimates of the Parties, Form CO and reply to an RFI of 
20 September 2018.  
25  See above para. (16). 
26  Non-confidential version of the minutes of the phone call with a distributor on 11 September 2018, 
non-confidential version of the minutes of the phone call with an airline on 30 July 2018.  
27  Non-confidential version of the minutes of th e phone call with a aerospace hardware manufacturer 
on 8 August 2018. 
10 The vast majority of respondents to th e market investigation confirmed that 
customers would not have difficulties switching to other suppliers. The distribution market is said to be competitive and there are several alternative suppliers, who would not face capacity cons traints and would have the ability and 
incentive to increase their supplies.
28 
(53) Further, from the feedback received duri ng the market investig ation, it results that 
switching costs and entry barriers are limited. First, KLX’s services are not considered as 'must-have' in the industry  and the Parties do not have a network of 
exclusive agreements with small parts ma nufacturers that may limit otherwise the 
ability of downstream players to switch to competitors. The contractual relationships in the industry are indeed rather diversified: exclusive agreements are not common. Customers have normally  both long term contracts as well as ad 
hoc purchases. Long term contracts are usually concluded after a competitive 
selection through a tender a nd renegotiations of the contractual terms are possible 
under certain circumstances. Furthermore,  market participants have business 
relations with multiple manufacturers a nd distributors. Overall, switching costs 
are not considered as high by the responde nts to the market investigation. In 
addition, customers can revert directly  to small parts manufacturers (thus 
bypassing distributors) and/or, as e.g. done  in the past by Boeing and Airbus, can 
internalise their distribution.
29 
(54) As mentioned above at paragraph (43), th e market does not present a concentrated 
structure and coordinated eff ects are therefore unlikely. 
(55) Furthermore, during the investigation, manufacturers of aerospace fasteners and 
of aerospace chemicals did not raise a ny concerns about the fact that the 
Transaction would impede competition by creating buyer power.30 One 
manufacturer of hardwa re explained that “ while it is true that KLX and Boeing 
will increase their combined procuremen t share, […] further to the Transaction 
the parties would [not] increase  their buyer bargaining power" , while according 
to one manufacturer of aerospace chemicals  “aircraft manufacturers like Boeing 
are relatively small custome rs for chemical products, compared to the quantities 
of aerospace chemicals procur ed by airlines, MROs and OEMs ”. 
(56) For the reasons set out a bove, the Commission conclude s that the Transaction 
does not raise serious doubts as to its comp atibility with the in ternal market as 
regard any horizontal effect of the c oncentration on the distribution of small 
aerospace parts and aerospace chemicals.  
4.4. Assessment of vertical effects 
(57) As the Parties are not active in the ma nufacture of neither  aerospace parts nor 
aerospace chemicals, the Transaction does not raise any verti cal links with the 
market upstream from those products.  
                                                 
28  Non-confidential version of the minutes of the phone call with an OEM on 27 July 2018.  
29  Non-confidential version of the minutes of the phone call with an OEM on 27 July 2018. 
30  Non-confidential version of the minutes of  the phone calls with two aerospace hardware 
manufacturers and with a aerospace chemicals manuf acturer on 7 August 2018, 8 August 2018, and 
23 August 2018. 
11 (58) However, the proposed Transaction leads to  two vertical links with the activities 
of Boeing on markets downstream from the markets for the distribution of 
aerospace parts and chemicals. As to the aftermarket, as indicated above at paragraph (44) and (46), Boeing has a [… ] market share of [0-5]% on the overall 
aftermarket, and below [5-10]% under any conceivable product and geographic 
sub-segment. However, the Transaction give s rise to a vertically affected market 
in relation to the manufacture of  large commercial aircraft.  
(59) The Commission has thus investigated whet her the Transaction is likely to give 
rise to a significant impediment to effective competition by restricting 
downstream rivals’ access to  an important input (inp ut foreclosure) or by 
restricting upstream rivals’ access to a sufficient customer base (customer 
foreclosure). 
4.4.1.  Parties' arguments 
(60) The Parties submit that the Transacti on does not create a ri sk of input nor 
customer foreclosure. 
(61) As concerns the risk of input foreclosur e, the Parties explai n that the merged 
entity would not have the ability to foreclose. KLX and Boeing are not 'must 
have' suppliers and for each category of sm all parts distributed by them there are a 
number of manufacturers selli ng directly as well as a ra nge of other distributors.  
(62) The merged entity would also not have a ny incentive to foreclose. At present, 
KLX sells to customers other than Boei ng, who could turn to  the other numerous 
suppliers. As such, any attempt to foreclose competitors or raise prices would only drive customers away, and lead to hi gher losses than any potential gains. 
(63) In addition, the overlapping products' cat egories would not be important cost 
factors. The cost of small aerospace parts is a de minimis  portion of the total cost 
to manufacture or maintain an aircraft. 
(64) As to the risk of customer foreclosure,  the Parties contend that Boeing would not 
have the ability to foreclose. This would be the case because Boeing and all the OEMs supplying Boeing do not represent a si gnificant portion of total demand for 
small aerospace parts. Other distributors w ould continue to have access to a large 
customer base even if Boeing shifted all of its small pa rts (or of any sub-
categories thereof) purchases to KLX post-Transaction. 
(65) Boeing would have no incentive to re duce its purchases from third-party 
distributors where those dist ributors offer better prici ng or service. Boeing has 
continued to purchase from independent  distributors despite owning Aviall for 
over a decade. 
(66) There would be no risk of detrimental effects on the downstream market. There 
could in any event be no noticeable impact on cost of Boeing’s competitors even if other small parts supplie rs would raise their prices , given the insignificance of 
the cost of small spare parts products in relation to the manufacturing cost of the 
aircraft overall. 
12 4.4.2.  Commission's assessment 
A. Input foreclosure 
(67) A vertical relationship presupposes that th e product or service of the undertaking 
active in the upstream market in questi on constitutes an important input to the 
product or service of the undertaking active in the downstream market. The 
market investigation confirmed that fast eners are critical co mponents despite the 
fact that they do not represen t a significant cost factor.31 
(68) However, evidence from the market inve stigation supports the conclusion that it 
is unlikely that the merged entity woul d have the ability to foreclose Boeing’s 
competitors on the downstream market . As already explained above at 
paragraphs (51) to (54) and (55), the Commission considers, on the basis of the 
evidence available to it, that the merged  entity does not have a significant degree 
of market power and the input market doe s not present an oligopolistic structure. 
(69) Further, the incentive to foreclose depe nds on the degree to which foreclosure 
would be profitable. The Commission unde rstands that Boei ng would not have 
the incentive to raise prices to the OEMs,  current customers of KLX, in order to 
raise costs for competing aircraft manu facturers as this strategy would be 
countervailed by the fact that Boei ng’s main competitor on the downstream 
market for the aircraft manufacturing, (i .e. Airbus) does also have integrated 
distribution services (i.e. its  subsidiary Satair) and could easily switch its demand 
from KLX to Satair, if not to other parts distributors and manufacturers.. 
(70) In addition, the market investigation has indicated that the merged entity would 
have little scope for raisi ng rival aircraft manufacturers  or MRO’s costs. Owing to 
the low input cost that sma ll aerospace parts represent in the overall price of an 
aircraft or of the services provided by MROs, any possible price increase could 
not materially affect the ability of ri val aircraft manufacturers or MROs to 
compete in the downstream markets. 
(71) For the reasons set out a bove, the Commission consider s that the Transaction 
would be unlikely to have detrimental effects on competition on the downstream markets as it woud not result in foreclos ure of downstream competitors’ access to 
small aerospace parts or aerospace chemicals. 
B. Customer foreclosure 
(72) As regards customer foreclosure, in light of the evidence available, the 
Commission finds that the Transaction is not likely to result in customer foreclosure for the reasons set out below.  
(73) First, the Commission notes that at present Boeing […] on its captive BASN 
program for the sourcing of proprietary Boeing fasteners. From the information 
submitted by the Parties, and as also confirmed by the respondents to the market investigation
32 and public sources33, in the effort to better control the quality of 
                                                 
31  Non-confidential version of the minutes of the ph one call with a distributor on 14 September 2018.  
32  Non-confidential version of the minutes of the phone call with an aerospace  hardware manufacturer 
on 8 August 2018. 
13 fasteners, Boeing switched from using st andard fasterners to proprietary BAC 
fasteners for approximately […] of its requirements. As a consequence Boeing's 
demand for standard fasteners from  third parties is very limited. 
(74) Furthermore, from the information submitte d by the Parties, it results that Boeing 
sources […]. Purchases from independent  distributors tend to be […], whereas 
purchases from manufacturers  tend to account for [...]. 
(75) Despite its market share (see paragra ph (44)), the overall demand of Boeing to 
independent distributors is th erefore too limited to provide the ability to engage in 
any strategy that could result in any pl ausible customer foreclosure of upstream 
competitors of KLX.  
(76) Second, as submitted by the Parties, past conduct of Boeing after the acquisition 
of Aviall supports the claim that Boeing doe s not have any incen tive to engage in 
customer foreclosure. Boeing has con tinued to purchase from independent 
distributors despite owning Aviall for over a decade. 
(77) Third, as regards the possibl e overall impact of a for eclosure strategy, fasteners 
are low value parts that make up less than 5% of the total cost of any aircraft 
component, so that any impact on final customers appears remote even in the unlikely event that Boeing would stop purchasing small parts from third party sources and, as a result, potentially rais e costs for competitors on the downstream 
markets. 
4.4.3.  Conclusion 
(78) For the reasons set out a bove, the Commission conclude s that the Transaction 
does not raise serious doubts as to its comp atibility with the in ternal market as 
regards any vertical effect of the con centration between, on the one hand, the 
distribution of small aero space parts and aerospace chemicals and, on the other 
hand, the manufacturing of aircraft  and relevant aftermarkets.  
5. C
ONCLUSION  
(79) For the above reasons, the European Co mmission has decided not to oppose the 
notified operation and to declare it compatib le 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 Member of the Commission 
                                                                                                                                                 
33  E.g. Tauber institute for Global operations: Boeing: The Fight for Fasteners, available online 
https://www.supplychainmarket.com/doc/boeing-case-study-0001  (25th September 2028).