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 -MERG ER-REGISTRY@ec.europa.eu .  EUROPEAN COMMISSION  
Brussels, 05.10.2018  
C(2018 ) 6643 final  
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has been replaced by ranges of figures or a 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.   
PUBLIC VERSION  
To the notifying parties  
 
Subject : Case M. 8960 – Adient/ Boeing/JV (Aircraft seats)  
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 31 August 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 ) and Adient plc ( “Adient ”, 
United States ) via its subsidiary Adient US LLC  acqui re within the meaning of 
Article 3(1)(b) and 3(4) of the Merger Regulation joint control of newly created 
joint-venture Adient Aerospace , LLC (the “Seats JV ”)3 (“the Transaction”) . 
(Boeing  and Adient  are designated  hereinafter as “the Parties ”.) 
                                                 
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 Europea n 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 throug hout this decision.  
2  OJ L 1, 3.1.1994, p. 3 (the 'EEA Agreement').  
3  Publication in the Official Journa l of the European Union No C 322 , 12.9.2018 , p. 19. 

 
2 1. THE PARTIES  
(2) Boeing designs, manufactures and sells commercial jetliners and defence, space 
and security systems. Boeing also provides aftermarket services for the 
aerospace market. Its products and services include commercial and military 
aircraft, satellites,  electronic and defence systems, launch systems, advanced 
information and communication systems.  
(3) Adient designs, manufactures and markets seating systems and seating 
components for passenger cars, commercial vehicles and light trucks. In 
addition, Adient s upplies seating systems to the commercial trucking and 
international motorsports industry. Adient's seating activities are limited to the 
automotive sector. It does not manufacture or sell aircraft seats.  
2. THE OPERATION  
(4) The purpose of the Seats JV  will be t o design, develop, manufacture and sell 
[description of the JV's scope]  seats for both regional and large commercial 
aircraft. The Seats JV will [description of the JV's scope] . The Seats JV  will sell 
its seats primarily directly to airlines and aircraft l easing companies in both line -
fit and retro -fit4 situations on regional and large commercial aircraft of Boeing 
and of other aircraft manufacturers.  
(5) The Contribution Agreement between the Parties was signed on 
11 January  2018 and the finalised Limited Liability Company  (LLC) 
Agreement5 will be signed upon fulfilment of the conditions required for “Initial 
Closing ”, as laid down by the Contribution Agreement6. 
(6) Pursuant to the Contribution Agreement, t he Seats JV  will be jointly owned by 
Adient and Boeing  with 50.01% and 49.99% of the shares in the Seats JV  
respectively. Adient and Boeing will contribute […].  
(7) [Description of the JV's governance structure]7,8,9,10. 
(8) Thus Adient and Boeing will have joint control of the Seats JV  pursuant to 
Article 3(1)(b) of the Merger Regulation.  
                                                 
4  The installation of aircraft seats prior to the initial delivery of a newly manufactured  aircraft is called 
"line -fit". "Retrofit" refers to the replacement of aircraft seats by  new seats at any time following the 
initial delivery of an aircraft.  
5  Annexes 9 and 10 to the Form CO.  
6  See Contribution Agreement Artic le VI, Annex 9 to the Form CO.  
7  […]. 
8  […]. 
9  […]. 
10  Section 4.6 (h) to (kk) of the Form of LLC Agreement.  
 
3 3. FULL FUNCTIONALITY OF  THE JOINT VENTURE  
(9) The parties will create a full -function joint venture within the meaning  of 
Article  3(4) of the Merger Regulation.  
a. As regards the Seat JV’s resources to operate independently on the market, 
the Seat JV will have its own financial resources, management and staff  
(transferred or seconded from Adient and Boeing as well as hired by the 
Seats JV ), intellectual property rights, manufacturing p lants , production 
tools  and office premises.   
b. As regards the scope of the Seat JV’s activities, the Seat JV will itself 
engage in product development, manufacturing, and marketing of aircraft 
seats  and sell them on the market  
c. As regards sales and purchase  relations with the Parties, the seats  JV will 
not make the majori ty of its sales or purchases to and from the Parties  
parents . It is currently envisaged that the Seats JV will purchase […] 
components from Adient at arms ’ length  conditions and the Seats  JV will 
design and manufacture its own aircraft seats , thus adding considerable 
value to the components purchased from Adient. The JV’s main customers 
will be airlines and commercial aircraft leasing  companies rather than 
aircraft manufacturers  and the Seats JV  will only occasionally sell  to 
Boeing.  
d. Finally, t he Seats JV  will be set up for an indefinite period of time.  The 
Seats JV is, therefore, intended to operate on a lasting basis.  
4. EU DIMENSION  
(10) The undertakings concerned have a combined aggregate world -wide turnover of 
more than EUR 5 000 million11 (Boeing EUR 82 670  million, 
Adient  EUR  14 704 million) . Each of them has an EU -wide turnover in excess 
of EUR 250 million  (Boeing EUR […], Adient  EUR […]), 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 . 
5. MARKET DEFINITION  
(11) The Transaction concerns the manufacture of aircraft and of seating used on 
such aircraft.  
                                                 
11  Turnover calculated in accordance with Arti cle 5 of the Merger Regulation.  
 
4 5.1. Manufacture of aircraft  
5.1.1.  Product market  
(12) Boeing is active in the manufacture of different types of aircraft. Commission 
precedents have generally differentiated the following main categories of 
aircraft: commercial aircraft (which include large commercial aircraft, regional 
aircraft, and business/corporate jets), military aircraft, helicopters and general 
aviation aircraft.12 
(13) Within commercial aircraft the precedents differentiated three segments:13 
a. Large commercial aircraft (i.e., ai rcraft with more than 100 seats, a range of 
greater than 2000 nautical miles and a cost in excess of USD 35 million). A 
distinction can be d rawn between:  
i. narrow -body (or single -aisle) aircraft, which have approx. 100 -200 
seats and travel medium distances ( 2000 -4000 nautical miles); and  
ii. wide -body (or twin -aisle) aircraft, which typically carry 200 -850 
passengers and can travel longer routes (4000 - 8000+ nautical miles).  
b. Regional aircraft (i.e., aircraft with approx. 30 -90 seats, a range of less than 
2,000 n autical miles and a cost of up to USD 30 million);  
c. Business/Corporate jets (i.e., aircraft designed for corporate activities and 
with a cost generally in the region of USD 3 - 70 million).  
(14) Following those precedents, additional aircraft were introduced to the market 
that fall into the 90 -120 seats range that may potentially blur the previous 
distinction between narrow -body large commercial aircraft and regional 
aircraft14, such as the Embraer E190 or the Airbus A220 -100 and A220 -300 
(formerly Bombardier CS100  and CS300 ). The Commission has therefore 
considered in a recent case a further split of the potential product market for 
narrow -body aircraft into (i) a segment for n arrow -body aircraft with 
90-120 seats and (ii) a segment for narrow -body aircraft wi th 120 -200 seats15. In 
any event, t he sub -segmentation of the product market for commercial aircraft 
can be left open in this case as no serious doubts arise under either of the 
alternative market definitions.  
                                                 
12  Case M.1601, Allied Signal/Honeywell , paragraph 11.  
13  Case IV/M.877, Boeing/McDonnell Douglas , paragraphs 15 and 16; Case M.1601, Allied 
Signal/Honeywell , paragraph 13; Case M.2220, General Electric / Honeywell , paragraph 10.  
14  See also page 65 and Chart 14 of the Industry report 'Commercial Aerospace Primer' by Bank of 
America/Merrill Lynch, 04 May 2016.  
15  M.8858 , Boeing/Safran/JV (Auxiliary power units) , paragraph 14.  
 
5 5.1.2.  Geographic  market  
(15) All markets, with the except ion of military aircraft, have been considered to be 
worldwide in geographic scope.16 The market investigation in this case has not 
provided any reasons to deviate from th ose precedent s. The markets for the 
manufacture of aircraft relevant for this case, th at is to say the market s for the 
manufacture of regional and large commercial aircraft and their potential sub -
segments, are therefore considered to be worldwide in scope.  
5.2. Manufacture of aircraft seating  
5.2.1.  Product markets  
(16) A Commission precedent17 examining aircraft seating found that aircraft seats 
constituted a separate market and considered several segmentations: Fi rst, the 
Commission  found that aircraft seats could be differentiated according to the 
type of the aircraft, into seats for regional and large commercial aircraft on the 
one hand  and seats for business aircraft  on the other hand , due to the different 
size of the seats.  Second, t he Commission  considered that within regional and 
large commercial aircraft, the differentiation between first, business and 
economy class can be made because of the differences in price, in market 
demand in number of seats for each class, in functionality and in comfort of 
seats. The Commission  however left th e ultimate market definition open.  
(17) The Par ties submit that that aircraft seats constitute a separate market. They also 
believe that, given the strong supply -side substitutabili ty between the different 
categories of aircraft seats, all aircraft seating pro ducts should be considered 
part of the same product market.18 
(18) As regards a sub -segmentation of the aircraft seating market by type of aircraft, 
responses19 by market participants were mixed . Some held that business jet 
seating was significantly different from commercial aircraft, as they have some 
specificities in their appearance and design and need to encompass a broader 
range of functionalities if needed. Others noted that overall competitiv e 
conditions were however similar; such as negotiation processes and many of the 
same suppliers. At the same time, regional and large commercial aircraft were 
noted to differ in their procurement process; seating for regional is more often 
procured by the aircraft manufacturer while for large commercial it is more 
often procured by the airline.   
(19) In any event, for the purposes of this decision, the question whether the product 
market for aircraft seating  should be sub -segmented by type of aircraft  can be 
left open, as no serious doubts arise under any alternative product market 
definition.  
                                                 
16  Case M.8858 , Boeing/Safran/JV (Auxiliary power units) , paragraph 15; M .2220, General 
Electric/Honeywell , paragraphs 10 -34; Case M.1601, Allied Signal/Honeywell , paragraph 13; Case 
IV/M.877, Boeing/McDonnell Douglas , paragraphs 14 -20. 
17  Case M.8305, Rockwell Collins/BE Aerospace , paragraph s 14 and 16.  
18  Form CO, paragraph 16 7. 
19  See replies to question 11 of the Commission's questionnaire of 6 September 2018.  
 
6 (20) As regards a sub -segmentation of the aircraft seating market by  seat class, the 
market investigation in this case provided indicat ions that there may indeed be a 
degree of substitutability between  aircraft seating for different seat classes on a 
commercial aircraft : however, it pointed to some differences at the same time. 
Price levels of economy and "premium " (that is to say business and first cla ss) 
seats were found to be significantly differe nt. Also the sophistication of the seats 
and the skill required to produce premium seats was reported to be significantly 
higher  such that a large number of suppliers was found to be active in economy 
seats only . The production volumes  and also the production processes  were also 
mentioned to differ, premium class seats requiring more manual labour while 
economy seat production was more automatized.  Furthermore, certification  was 
reported to be more challenging an d to take longer for business class seats as 
opposed to economy.  No such specific differentiators were mentioned between 
aircraft seats for first class and business  class , as part of the premium segme nt. It 
was noted in addition that the boundary between b usiness and first class seats  
was blurring and the number of first class seats decreasing as a result of business 
class products undergoing significant development and upgrade.20 For the 
reasons above, it is conceivable that a separate product market for bu siness class 
seating could exist.  
(21) However, for the purposes of this decision, the question whether the product 
market for aircraft seating  should be sub -segmented by seat class can be left 
open in this case as no serious doubts arise under any alternative  product market 
definition .  
(22) Furthermore, aircraft manufacturers such as Boeing act as resellers of aircraft 
seats in certain instances , (see also paragraph (24)). The Commission can leave 
open whether such resales fall into the same product market as the sales by 
aircraft seat manufacturer (see the assessment of a potential horizontal overlap 
assessed under section 6.1) or whether they fall into a product market 
downstream of the sale by aircraft manufacturers (see the assessment of the 
vertical links under section 6.2) as no serious doubts arise under any alternative 
product market definition . 
5.2.2.  Geographic  markets  
(23) The Commission has defined the markets  for aircraft seating  as global , finding 
that the competitive conditions for the purchase of aircraft seats do not differ 
between the EEA and the rest of the world .21 The Parties  share  this view22, 
which has been confirmed by the market investigation  in this case  as well .23 The 
geographic market for the sale of aircraft seats  and its potential sub -segments  
are therefore considered to be worldwide  in scope .  
                                                 
20  See replies to question 10 of the Commission's questionnaire of 6 September 2018.  
21  Case M.8305, Rockwell Collins/BE Aerospace , paragraph s 15. 
22  Form CO, paragraph 170.  
23  See replies to question 12 of the Commission's questionnaire of 6 September 2018.  
 
7 6. COMPETITIVE ASSESSMEN T  
(24) The sale of aircraft seats usually occur s under the buyer furnished equipment 
(“BFE”) model whe re the final customers, such as airlines and aircraft leasing 
companies, purchase new seats directly from aircraft seat manufacturers to outfit 
their newly purchased aircraft  or upgrade an existing aircraft . Alternatively, the 
sale may occur under the suppli er furnished equipment (“SFE”) model whe re 
the final customers purchase the seats from the aircraft manufacturer.   
(25) Under both models, the aircraft manufacturer installs the aircraft seats on the 
newly acquired aircraft  (usually not, however, on existing ai rcraft) , but the 
contractual relations differ: Under the BFE model, which according to Boeing 
accounts for [80-90]% of the sales of seats on large commercial aircraft  in line -
fit sit uation s,24 the final customer  (i) chooses the  type and number of seats; 
(ii) negotiates the price and other terms of supply directly with the seats 
manufacturer; (iii) enters into a direct supply agreement with the seat 
manufacturer; and (iv) is invoiced directly by the seat manufacturer. In line -fit 
situations, t he supplier and equipment chosen must be approved by the aircraft 
manufacturer only with regard to performance requirements (quality, delivery, 
compliance, etc.).  Under the S FE model,  the final customer negotiates the 
supply of aircraft seats with the aircraft manufacture r and accordingly enters 
into a contract for the supply of aircraft seats with the aircraft manufacturer . 
(26) Against that background, t he Transaction creates  
a. potential  horizontal overlaps in the sale of aircraft seat s where Boeing is 
active to a limited exte nt and where the Seats JV will be active ,  
b. a vertical relationship  since the Seats JV will be active in the production of 
aircraft seats which are sold directly to aircraft manufacturers such as 
Boeing if the final customers decide to purchase aircraft sea ts under the 
SFE model  in line -fit situations , and  
c. a conglomerate relationship  since the Seats JV will be active in the 
production of aircraft seats and Boeing is active in the production of aircraft 
and both products are sold directly to the final customer  around  the same 
time if the final customers decide to purchase aircraft seats under the BFE 
model  in line -fit situations .  
(27) In addition, the Commission has examined whether the Transaction could have 
adverse effects on the sale of aircraft seat in retro -fit situations, where the final 
customer decides to purchase new aircraft seats f or an aircraft it already owns, 
since the Seats JV will be active in the production of aircraft seats for such retro -
fit situations and Boeing ha s been alleged by some m arket participants to have 
influence over the choice of retro -fit seat suppliers.  
                                                 
24  Boeing estimates that [80-90]% of its seats deliveries  on new aircraft  were under the BFE model  and 
that this figures is the same for the entire market for seats on new large commercial aircraft , Form CO, 
paragraph 147.  
 
8 6.1. Potential h orizontal overlap25 
(28) The Parties  submit  that Boeing merely re-sells aircraft seats that it purchases 
from third parties and does not manufacture the seats . They argue that, therefore , 
no horizontal overlap arises.26  
(29) Boeing does not manufacture aircraft seats. However, it sells aircraft seats in 
connection with the modification or upgrade of aircraft interiors through its 
subsidiary Boeing Global Services (“BGS”)27 and has a co -development 
arrangement with aircraft seat manufacturer LIFT/Encore for the design, 
manufacture and sale of seats for certain Boeing aircraft under the SFE model.  
(30) If, on a conservative basis,  those resale volumes of aircraft seats are  attributed  to 
Boeing  (rather than to the seat manufacturer) , Boeing achieved a market share of  
approximately  [0-5]% in 20 17, BGS included .28 The Seat JV’s market share is 
currently 0%.  Regarding future  sales , the Parties  expect (i) the Seats JV to 
achieve a market share of [5-10]% in aircraft seats by 2028 on an overall market 
for seats, with a market share of up to 10% in the sub -segments of business class 
seats and economy class seats  for large commercial aircraft  and (ii) Boeing t o 
achieve a market share of less than 10% in the next ten years .29 
(31) The combined market shares of the Seats JV and Boeing are therefore likely to 
remain below 20% in the foreseeable future . The market is currently 
characterised by the presence of the three  strong competitors  Safran, Rockwell 
Collins and Recaro30 and the presence of a large number of smaller suppliers, as 
set out below in Table 1, Table 2 and Table 3. This indicates that the Parties and 
the JV are unlikely to obtain market power  in aircraft seats in the foreseeable 
future .  
(32) Moreover, no concerns were raised in the market investigation as regards the 
potential overlap between the activities of Boeing and the Seats JV in selling  
aircraft seats.  
(33) Based on the assessment in paragraphs (29) to (32), the Commission concludes 
that the Transaction does not raise  serious doubts as to its compatibility with the 
                                                 
25  An additional potential horizontal overlap in the sale of spare parts for aircraft seats does not lead to 
affected markets toda y or in the foreseeable future . Boeing’s subsidiary Aviall had a market share of 
less than [0 -5]% in the distribution of spare parts for aircraft seats in 2017 while the Seat JV’s market 
share in the sale of spare parts is not expected to exceed its market  share in aircraft seats (currently 0% 
and estimated to reach at most 10% in the segments of business class seats and economy class seats in 
the first 10 years of operation).  
26  Form CO, paragraph 187.  
27  BGS se lls seats for retro -fit purposes only as part  of a wider service, but not on a standalone basis. 
Typically, however, the seats are purchased and provided directly by the airline customer, Parties’ 
response to RFI1, part 1, question 1a.  
28  Form CO, paragraphs 136 and Parties’ response to RFI1, questio n 1a on 7 September, 2018  and to 
RFI 4bis on 4 October, 2018: If the sub -segment of seating for large commercial and regional is 
considered, this share rises to [0 -5]%.  
29  Parties’ response to RFI1, question 1b on 7 September, 2018.  
30  See replies to ques tion 13 of the Commission's questionnaire  of 6 September 2018.  
 
9 internal market with respect to the horizontal overlaps brought about by the 
Transaction.  
6.2. Vertical31,32 and conglomerate relationships  
(34) The Seats JV will create future vertical and conglomerate relationships between 
the Seat JV’s manufacturing of aircraft seats and Boeing’s manufacturing of 
commercial aircraft  as set out in paragraph (26). 
(35) As a potential new entrant, the Seats JV currently has a market share of 0% and 
will be a new source of supply. None of the current aircraft manufacturers or 
final customers relies o n the Seats  JV for any of their aircraft seats purchases. If 
aircraft manufacturers and final customers were to purchase aircraft seats  from 
the Seats  JV in the future, this would mean that they would benefit from the 
existence of an additional source of aircraft seat  supply, extending rather than 
limiting their choice of aircraft seat  supplier. Therefore, no input foreclosure 
concerns will arise in this case.  
(36) The Commission’s investigation therefore focussed on potential customer and 
conglomerate foreclosu re concerns , as well as on concerns  about the disclosure 
of commercially sensitive information raised during the market investigation as 
set out in sections  6.2.1  to 6.2.3 . 
6.2.1.  Concerns raised during the investigation  
Foreclosure effects  
(37) Some aircraft seat producers  expressed concern s during the market investigation  
of being excluded from future purchases  of seats for Boeing aircraft, as Boeing 
would favour aircraft seat purchases from the Seats JV . They acknowledge that 
Boeing does not itself choose the aircraft seat supplier  in the vast majority of 
cases . They  subm it, however,  that Boeing will be able to influence the final 
customers’ choice  of seats for all Boeing aircraft through different  mechanisms , 
                                                 
31  An additional future vertical link between Adient and the Seats JV concerning components for aircraft 
seats  does not lead to vertically affected markets  today or in the foreseeable future . Adient does not 
currently sell components for aircraft seats with the exception of a one -time indirect supply […]. 
Adient’s market share is currently marginal in the supply of components for aircraft seats and the 
market share of the Seats JV is 0% (and exp ected to increase to [10 -20]% in certain segments of the 
aircraft seats markets by […]). The market shares are therefore likely to remain below 30% in the 
upstream and downstream markets.  
32  An additional potential vertical link between Adient and the Seats JV concerning the testing of aircraft 
seats is unlikely to lead to affected markets and ultimately competition concerns. Adient owns an 
aircraft testing facility in Germany which is used fo r the testing of aircraft seats of […]. Adient 
acquired the testing facility in 2012 […]. The vast majority of aircraft seat manufacturers have testing 
capabilities of their own and are thus unaffected by this link. Furthermore, […] is unlikely to be 
negat ively affected by this link going forward: The testing facility has sufficient capacity to be used by 
both […] and the Seats JV. Furthermore, […] could use the crash testing facilities of alternative 
providers such as TASS International and Centre d’Essais  Dynamiques. Moreover, […] has announced 
investment in new facilities, including […] (see Parties’ response to RFI1), question 2 and Annex 3. In 
addition, the Parties report in their reply to RFI3 on 3 October 2018 that the total cost of the aircraft 
seat testing services that Adient provides to […] at its  testing facility in Kaiserslautern is […] which, 
according to the Parties’ estimates, amounts to [0 -5]% of the variable and total production costs of […] 
in the EEA.  
 
10 including : Boeing could decide to limit the number of aircraft seat suppliers 
available in line -fit situation s on Boeing aircraft  since Boeing decides which 
suppliers’ aircraft seats are offerable on its newly purchased aircraft . Boeing 
could grant the Seats JV more favourable conditions  (such as granting the 
Seats  JV reduced or waived IP royalty fees to be paid t o Boeing or providing the 
Seats JV better or more rapid access to information relevant for obtaining 
regulatory approvals  of its seats ) while worsening simultaneously the conditions 
for the competing seats suppliers . All of those and similar mechanisms wou ld 
result in loss of turnover of competing aircraft seat suppliers  in sales of seats on 
Boeing aircraft .33 
(38) Some of the complaining aircraft seat producers argue that  such reduced or 
discontinued sales of aircraft seats on Boeing aircraft would have negative  
effects on the competitiveness of aircraft seat suppliers and on the markets for 
aircraft seats  as a whole . Those seat producers argue principally that the reduced 
sales would lead to higher prices of aircraft seats as research and development 
costs would  have to be spread across a smaller number of aircraft seats  sold. 
Alternatively, the potential decrease of sales could lead to a reduction in 
innovation in order to keep costs down. They argue that the final customers and 
potentially also manufacturers of  large commercial aircraft could be faced with 
higher prices and less innovation as a result of the Transaction.34  
Access to commercially sensitive information  
(39) Some aircraft seat producers  raised  concerns during the market investigation 
relating to the Seat JV’s potential access to competin g seat suppliers’ 
commercially sensi tive information . They explained that Boeing requires a large 
amount of confidential information to be transmitted to Boeing  to become  
offerable on Boeing aircraft .35 
(40) One of the seat producers in particular submits that the value of its confidential 
business information  cannot be fully preserved through IP rights because assets  
such as know -how are not in the scope of IP rights . It further considers  that non -
disclosure agreements used in its business with Boeing are insufficient  to ensure 
that its information will not be used by the Seats JV  to gain market  share to the 
detriment of competing suppliers . A major concern in this respect  would be the 
announced transfer to the Seats JV  of personnel handling Boeing's seat 
purchases  until recently .36 
(41) Such access to commercially sensitive information for the Seats JV through 
Boeing would put competitors at a disadvantage, dissuading them to expand and 
                                                 
33  See replies to question 2 of the Co mmission's questionnaire of 6 September 2018  and the 
complainant's submissions on e.g. 3, 11 and 20 September, 2018.  
34  See e.g. the complaint's submission on 3 September 2018.  
35  See replies to questions 2 and 14 of the Commission's questionnaire  of 6 S eptember 2018 e.g. the 
complaint's submission s on 5 July and  11 September 2018.  
36  See e.g. the complaint's submission on 24 July  2018.  
 
11 make investments in research and develo pment, leading to negative effects 
mainly in terms of chilling  innovation  efforts .37 
6.2.2.  The Part ies' views  
(42) On a general note, the Parties  submit that the rationale behind the creation of the 
Seats JV  has been the ongoing frustration of airlines with the perfor mance of the 
leading suppliers of aircraft seats and resulting repeated delivery delays since 
already a number of years.38 Boeing argues that these issues are also well 
documented in the press39 and notes that it recorded […] occurrences of seating 
delivered  late to a scheduled due date between 2012 and 2017 , out of which 
were […] occurrences where seat shipm ents were received more than 
60 calendar days late, effectively delaying the delivery of the aircraft.40 
Foreclosure effects  
(43) The Parties note that Airbus,  through its subsidiary Stelia Aerospace  ("Stelia") , 
has already been vertically integrated into seats  production for years . Stelia seats 
are deployed on more than 40 airlines and are mounted on both Airbus and 
Boeing aircraft. The Parties  consider that th e Airbus Stelia business model of 
competing against non-integrated seat supplier s in the supply of seats for use on 
both Airbus and Boeing aircraft is the same as the plan for the Seats JV .  
(44) Further , Boeing  argue s that it does not have the ability to foreclose competing 
seat suppliers . Boeing explains41 that it does not have the ability to drive 
customers' choice, as seats are an important competitive differentiator for 
airlines, and airlines are likely to push back against  any hypothetical effort by 
Boeing to offer a single choice of seat supplier , stressing that the ultimate 
decision lies with the customer.42 
(45) Boeing submits43 that the purpose of the offerability process does not lend 
Boeing a "gatekeep er role". The purpose of the offerability process, Boeing 
explains,  is to ensure that seats offered to customers for particular aircraft orders 
are technically suitable and available for that particular order. This is evaluated on 
a project -by-project basis.  In Boeing's view, customers assume a significant role 
                                                 
37  Ibidem.  
38  Form CO, paragraph 7.  
39  See e.g. Air Transport News, “787 Seat Supply Delays Continue But Solution Is Close” (22 Apr 
2015), available at https://www.ain online.com/aviation -news/air -transport/2015 -04-22/787 -seat-
supply -delays -continue -solution -close ; Skift, “United Is Mothballing Perfectly Good New Aircraft 
Thanks to Delayed Seats” (27 May 2017), available at https://skift.com/2017/03/27/united -is-
mothballing -perfectly -good -new-aircraft -thanks -to-delayed -seats/ ; and Bloomberg, “United’s New 
777s  Struggle With Luxury Seat Delays” (30 Mar 2017), available at 
https://www.bloomberg.com/news/articles/2017 -03-30/united -s-new-luxury -777-cabin -stumbles -on-
zodiac -seat-delays . 
40  Form CO, paragraph 80 and Annex 1 to Boeing's reply to the Commission's request for informatio n on 
09 August 2018 concernin g intern al records on delivery delays.  
41  Form CO, paragraph 160 and the Parties' submission prepared by CRA, page 4, 11 September, 2018 .  
42  Form CO, paragraph 50.  
43  See point 1.09 -1.11 of the Parties' submission […] of 11 September 2018.  
 
12 and can and do request  seats that Boeing does not initially identify as offerable for a 
given project. Boeing needs to answer to the airlines and in the past has been 
required to justify to these airli nes its decision not to make offerable a particular 
seat. 
(46) Boeing acknowledges that it plans the Seats JV  to become […] supplier for 
aircraft seats that Boeing sells under the SFE model . Boeing  observes , however , 
that this represents only a small percentage of all aircraft seats sold (approx. 
15% of all line -fit installations  for large commercial aircraft globally  while line -
fit installations on Boeing aircraft represent around one third of all aircraft seats 
sold).44  
(47) Boeing submits45 that a ll Boeing demand for line -fit seats represents roughly 
only one third of the market, while Airbus line -fit is another third and retro -fit 
being the remaining third. Therefore, under all assumptions, the addressable 
market would remain sizable for competing  aircraft seat suppliers.  
(48) Boeing also adds that the Seats JV's business plan does not foresee a capacity 
planning that would enable it to become the supplier of choice for all demand of 
aircraft seats on Boeing aircraft . It targets to achieve a [5-10]% mar ket share  on 
an overall market for aircraft seats  in 10 years, built up gradually. Boeing states 
that […].46 
(49) Boeing reasons that it does not have the incentive to limit airlines' choice on the 
selection  of seats , as this could damage its r elationship with its airline customers 
who prefer to have a large number of options and use interiors as an important 
differentiator against their rivals . Favouring its own Seats JV  could potentially  
reduc e the attractiveness of Boeing  aircraft and thus ultimately harm aircraft  
sales. Boeing argues that its potential profits due to its ~50% share in the 
Seats JV is disproportionately small by comparison with the profits it makes 
from selling aircraft , in particular since t he costs of the seats on an aircraft are 
only around [0-5]% of the price of an aircraft .47  
(50) As concerns the impact of a potential reduction of demand that according to the 
concerned aircraft seat suppliers  discourages innovation by incumbent suppliers 
and harms small suppl iers that cannot achieve efficient scale to be competitive, 
Boeing notes that the presence of a number of small suppliers, such as Turkish 
Seat industries, Jamco, Encore or Toyota Bashoku provide evidence that new 
entry can take place successfully backed b y orders from a single airline.48  
                                                 
44  Form CO, paragraph 135.  
45  See point 1.5 (a) of Boeing's submission […] of 9 August, 2018 an d Form CO paragraph 213.  
46  See point 1.5 (c) of Boeing's submission […] of 9 August, 2018 and 1.13 CRA Report, 
11 September  2018.  
47  See point 5.2 of Boeing's submission […] of 9 August, 2018 and 1.13 CRA Report, 
11 September  2018.  
48  Ibidem, point 4.2.  
 
13 Access to commercially sensitive information  
(51) Boeing argues that it has no ability or incentive to share competing seating 
suppliers’  confidential information with the Seats JV  for the following reasons:  
(52) Boeing  submits49 that such misappropriation of c onfidential information would 
violate IT and trade secret  law and Boeing’s contractual obligations. Boeing 
argues that it would be exposed to actions for damages and could suffer serious 
reputational harm  if it is i n breach of contract or in violation of the laws 
prohibiting trade secret misappropriation . 
(53) Boeing enters into Proprietary Information Agreements (“ PIAs ”) with its aircraft 
seat suppliers which establish the parameters within which confidential 
information and mate rials relating to the design, development, certification, 
integration and installation of seating used on Boeing aircraft will be 
maintained, accessed and used. The PIAs [excerpt from PIA] . The PIAs require 
each party to [excerpt from PIA] .50  
(54) In addition, Boeing describes that the specific aircraft seat information is only 
accessible to approved personnel , such as engineers. [description of information 
storage] .51 Once the Seats JV is established, Boeing describes52, it will be 
entirely distinct from its parents. It will have its own management and staff, IP 
rights, manufacturing plants, office premises  and IT systems . As a result, Boeing 
considers that there is no case of true vertical integration and thus the Seats JV 
does not, nor will it have, access t o confidential information of other seat 
suppliers.  
(55) Boeing affirms53 that it takes the protection of commercially sensitive  
information very seriously and has established procedural protections to preven t 
inadvertent disclosure : Boeing employs a strict inte rnal process (“Company 
Policies”) to protect the confidential information of all third party 
manufacturers. These Company Policies are documented and made available to 
each Boeing employee who receives third party information. A current copy of 
its policie s related to […].54 
(56) Boeing argues that the […] senior individuals, which are the only Boeing 
personnel who will be involved in the leadership or management of the Seats JV  
who have gained expertise in seat supply through their prior roles in Boeing's 
seat integration unit , have been firewalled off from Boeing  - including the seat 
IT systems - since January 2018. Beyond this, Boeing also considers that the 
competing seat supp liers also  overestimate the knowledge these individuals  had 
accumulated about their business and products.  
                                                 
49  Form CO paragraph 216 and the Parties' submission […] of 11 September 2018.  
50  Response of 24 September to the Commission’s request for information, question 9.  
51  Ibidem, question 11.  
52  Form CO, paragraph 219.  
53  Form CO, paragraph 216.  
54  See Annex es 4 and 5 to the Parties' reply to the Commission's pre -notification request for information 
on 11 July, 2018.  
 
14 (57) The Parties  argue that in any event, the use of confidential i nformation from seat 
suppliers is not a part of the JV’s business model and recalls th at numerous new 
entrants , such as LIFT, Mirus, Geven,  have succeeded in offer ing innovative 
solutions and increase competition without access to confidential information  of 
competing seat suppliers . Boeing adds55 that the prototype the Parties have 
develope d relied on Adient , which Boeing  considers to be one of the most 
sophisticated and well -respected automotive seat manufacturers in the world , 
and the third party  […].  
(58) The Parties  argue  further56 with respect to the alleged "quick entry"  of the 
Seats  JV on the basis of competing seat suppliers' confidential information, that 
the collaboration with Adient ha s already been ongoing for two years in order to 
develop prototype seats, leading to a total lead time of […] (with a targeted 
delivery schedule of […]). No JV seats have been certified or pre -certified by 
Boeing, and no JV seats were or currently are offerable by Boeing. Moreover , the 
Parties reiterate that their plan is to achieve only [5-10]% market share in 
10 years' time.   
(59) In any event, Boeing argue s that it does not have the economic incentive to use 
confidential information of a third party in order to foreclose competitors or 
reduce competition . Boeing’s incentives both pre - and post - Transaction are to 
ensure that the seat supply market is as competitive, innovative and effective as 
possible in order to enhance product quality and delivery schedules and to 
provide the best possible customer servi ce to airlines. In addition, the expected 
turnover from the JV’s supply of seats to airlines, well under [0-5]% of Boeing's 
total turnover, is not sufficient to risk damaging its relationships with customers 
and suppliers by engaging in prohibited use of s eat supplier’s confidential 
information.  
6.2.3.  The Commission's assessment  
Concentration levels  
(60) The market  for aircraft seats for regional and large commercial aircraft57 is 
characterised by the presence of the three  large  suppliers Safra n, Rockwell 
Collins and Recaro, together achieving a market share of around  [80-90]% and a 
large number of small seat manufacturers , as reflected in Table 1. 
                                                 
55  Form CO, paragraph 216.  
56  See point 1.6 (b) of the Parties' submission […] of 11  September 2018.  
57  The Commission will not present market shares or an assessment for markets defined more broadly, as 
for instance the market for all aircraft seats. Any effects of the Transaction on the overall aircraft 
seating market will be more limited than the effects assessed in this decision while the mor e 
pronounced links already do not lead to serious doubts for the reasons set out in this decision.  


 
17 (64) As regards the manufacture of large commercial aircraft  above 90 seats,  
Airbus and Boeing held market shares of [40-50]% and [50-60]%, respectively 
in terms of number of aircraft deliveries  in 2017.70 Embraer's market share 
amoun ted to [0-5]% while no other participants had  a materia l market presence 
in this segment .  
(65) If regional aircraft with less than 90 seats are included in the market definition, 
Boeing’s market share amounts to [40-50]%, in terms of number of aircraft 
deliveries in 2017 with Airbus, Embraer and Bombardier accounting for 
[40-50]%, [5-10]% and [0-5]% respectively.71  
(66) In the segment of large commercial aircraft of more than 120 seats, Boeing's 
market share amounts to [50-60]%, with Airbus accounting for the remaining 
[40-50]% in terms of number of aircraft deliveries in 2017. Finally, in the sub -
segment of wide -body commercial aircraft of 200 seats or more, Boeing held a 
market share of [50-60]% in terms of number of aircraft deliveries in 2017, with 
Airbus accounting for [40-50]%72. 
Customer  and conglomerate foreclosure  
(67) The Seats JV will create future vertical and conglomerate relationships between 
the Seat JV’s manufacturing of aircraft seats a nd Boeing’s manufacturing of 
commercial aircraft as set out in paragraph (26). The vertical relationship could 
lead to potential customer foreclosure concerns if t he merged entity had the 
ability and incentives to foreclose access to a sufficient customer base from its 
rivals and if that had an overall negative impact on effective competition. The 
conglomerate relationship could lead to potential foreclosure concern s if the 
merged entity had the ability and incentives to foreclose its rivals by leveraging 
a strong market position from one market to another through means of tying or 
bundling or other exclusionary practices and if that had an overall negative 
impact on  effective competition.  
(68) The Commission will assess foreclosure concerns stemming from the vertical 
(linked to sales under the SFE model) and conglomerate (linked to sales under 
the BFE model) links together since they are intrinsically linked. Such 
assessm ent allows the Commission also to assess all potential foreclosure effects 
taken together.  
(69) The Commission observes the following on Boeing's ability to foreclose competing  
aircraft seat  manufacturers:  
(70) First, Boeing has a market share of [50-60]% in the sale of large commercial 
aircraft above 90 seats and of [50-60]% in the sale of large commercial aircraft 
above 120  seats in terms of number of aircraft deliveries in 2017 and a market 
share of  [0-5]% in the sale of regional aircraft, leaving arou nd [50-60]% of 
demand for aircraft seats for large commercial aircraft and all of the demand for 
                                                 
70  Response of the Parties of 7 September to the Commission’s request for information, Annex 2 . 
71  Ibid. The market share presented by Boeing does not account for 26 regional aircraft deliveries by 
COMAC and United Aircraft Corporation (Sukhoi) in 2017.  
72  Ibid. 
 
18 aircraft seats for regional aircraft unaffected by the Transaction.73 Third party 
suppliers will thus continue to be able to sell their aircraft seats to a significant 
part of the market, including in the business and economy seat classes where the 
JV will be active.  
(71) Second, the market investigation indicated that aircraft manufacturers' influence 
on the choice of aircraft seat supplier in the retro-fit market is minimal.74 
Furthermore, several respondents confirmed the Parties' estimates that retro-fit 
orders constituted ca. 30%-33% of the seats demand across seat class es. 
Therefore, in addition to demand for aircraft seats to be installed on Airbus 
aircraft, demand for retro-fit sales on Boeing aircraft is likely to remain 
available, leaving an overall addressable market of around 6 5% for competing 
aircraft seat suppliers. 
(72) Third, […].  
(73) Fourth, it is unlikely or at least uncertain that the Seats JV will be able to serve 
all or most of demand for aircraft seats on Boeing aircraft going forward, 
leaving also at least part of demand for aircraft seats on Boeing aircraft 
unaffected by the Transaction.  
(74) In the first place, the market investigation confirmed that the airlines are in the 
driving seat when selecting the seat suppliers for their fleet under the BFE 
model . They choo se the seats from the aircraft manufacturers' ' “offerability list ”, 
which contains a number of suppliers to choose from. If a certain supplier is not 
on the offerability list, the airlines reported being able to make a request to the 
aircraft manufacturer and negotiate the additional supplier’s  inclusion.75 
Furthermore, market participants confirmed that the BFE model is prevalent for 
most large commercial aircraft and that the share of aircraft seats sold under the 
SFE model is minim al.76 
(75) In the second place, the Seats JV has no sales of aircraft seats yet and is 
expected to develop its presence gradually. […]. Therefore, it is doubtful 
whether the Seats JV will have the ability to foreclose its rivals by winning 
significant market share at their expense in the foreseeable future. The future 
market share projections from its business plan are accordingly modest: [5-10]% 
after the first 10 years including line-fit and retro-fit, reaching at most [10-20] % 
in […] for large commercial aircraft.77 
                                                 
73  Boeing has announced its intention to acquire aircraft manufacturer Embraer which manufactures 
mainly regional aircraft: http://boeing mediaroom.com/2018- 07-05-Boeing-and-Embraer- to-Establish-
Strategic-Aerospace-Partnership- to-Accelerate-Global-Aerospace-Growth . Since no binding 
acquisition agreement has been signed and the regulatory approvals have not been received, the 
Commission will treat Boeing and Embraer as separate entities for the purposes of this decision. 
74  See replies to question 5 of the Commission's questionnaire of 6 September, 2018. 
75  See replies to question 5 of the Commission's questionnaire of 6 September, 2018  
76  See replies to question 5 of the Commission's questionnaire of 6 September, 2018. 
77  Parties’ response to RFI1, question 1b on 7 September, 2018. According to the business plan of the JV, 
the Seats JV will reach sales of USD […] in 2026, of which USD […] is expected to be generated 
from retro-fit and USD […] from production of new seats, while spare parts account for USD […]. 
 
19 (76) In the third place, Rockwell Collins and Recaro are strong aircraft seat suppliers 
with established relationships with final customers. They may offer superior 
technology or quality and may have a price advantage over the products of the 
Seats JV. It is therefore uncertain whether final customers would be interested in 
foregoing purchases from those suppliers and whether Boeing would be able to 
prevent its custom ers from buying from these established competitors.  
(77) Fifth, the market for aircraft has been growing rapidly in the past ten years and 
the growth is expected to continue78. The Parties estimate79 that this growth will 
translate into an increase from a USD […] aircraft seats market in 2017 to a 
USD […] aircraft seats market  in 2026.  Any reduction of the addressable 
merchant market could therefore be counterbalanced by general market growth.  
(78) Sixth, the limited market presence of Airbus’s wholly -owned subsidiary  Stelia  
argue s against the ability for aircraft manufacturers to engage in foreclosure 
through vertical integration. Stelia designs and produces business and first class 
passenger seats  among other products . Stelia's market share is well below the 
share of  Airbus aircraft ( [20-30]% in first class  seats and less than [10-20]% in 
business class seats on large commercial aircraft80). Although Stelia is an Airbus 
subsidiary, [50-60]% of Stelia’s sales volume s for seats are made on Boeing 
aircraft.81 No market par ticipant has raised concerns about Airbus ’ ability to 
foreclose other aircraft seat supplier to the benefit of Stelia in first class or 
business class seats.   
(79) As concerns Boeing's incentive  to foreclose alternative aircraft seat  suppliers, 
the Commission finds the following:  
(80) First, the market investigation confirmed that airlines value choice  in aircraft 
seats supply.82 Seat pro ducts are differentiated and allow the airlines to 
differentiate themselves from their competitors, thu s airlines may have specific 
preferences for certain seat models/suppliers.  The alternative seat  suppliers are 
well-established and  have long -standing relationships with the airlines who are 
the final customers. Limiting the choice  of available aircraft se at suppliers  is 
likely to result in customer dissatisfaction harming Boeing’s business 
relationship with its customers. Boeing has little incentive to upset its customers 
by limiting their choice and offering them a worse product than before the 
Transactio n.  
(81) Second, the strategies adopted by Airbus in the past a rgue against incentives for 
aircraft manufacturers to engage in foreclosure through vertical integration. 
                                                 
78  See e.g. page 89 and Chart 28 of the Industry report 'Commercial Aerospace Primer' by Bank of 
America/Merrill Lynch, 04 May 2016, see also Form CO and see also foreca sts of Airbus and Boeing, 
at Global Market Forecast 2018 - https://www.airbus.com/aircraft/market/global -market -forecast.html  
and also transcript  of a speak of Boeing CEO at Morgan Stanley Laguna Confer ence on 12 September, 
2018, page 2.  
79  Form CO, paragraph 84 . 
80  Response of the Parties of 7 September to the Commission’s request for information , Annex 1.  
81  See […] reply to  question 1 of  the Commission's questionnaire of 6 September, 2018 .  
82  See replies to questions 2 and 3 of the Commission's questionnaire of 6 September, 2018.  
 
20 Airbus' wholly -owned subsidiary Stelia ’s market share is well below the share 
of Airbus airc raft as set out in paragraph (78). No market participant has raised 
any concerns about Airbus trying to foreclose other aircraft seat supplier s to the 
benefit of Stelia in first class or business class seats.   
(82) Third, the revenue  base on which Boeing could, though a foreclosure strategy, 
achieve higher prices and thus higher profits in the seat supply is 
disproportionately small compared to the pr ofits it can achieve throug h the sale 
of aircraft. The benefit is even smaller consider ing Boeing's ~50% share in the 
Seats JV. Therefore, it is Boeing's interest to drive the sales of its aircraft  rather  
than try to increase prices on the aircraft seat ma rkets. Should Boeing endeavour 
to capture the entire market share of the seat JV's competitors on Boeing 
aircraft, the size of that market would not exceed [0-5]% of its annual turnover.  
(83) Fourth , a further past example supporting the lack of incentives for  Boein g to 
limit customer’s choice of aircraft seat is its collaboration with Lift/Encore . 
With that collaboration , Boeing introduced an additional economy seat choice 
under the SFE model for 737 aircraft without limiting the choice for alternative 
seats.83 
(84) Fifth , as regards concerns about the unequal treatment of the Seats JV and 
competing aircraft seats suppliers in terms of royalty fees to be paid to Boeing84, 
Boeing confirmed85 that the Seats JV will […]. […].  
(85) As concerns the impact  of Boeing's potential foreclosure of alternative aircraft 
seat suppliers, the Commission finds the following:  
(86) First, t he creation of the Seats JV  will result in adding a new seats supplier to the 
market. Final customers’  choice of seats suppliers available in the market will b e 
enlarged , both on Boeing and on Airbus aircraft.  
(87) Second, t he Seats JV  will develop its own  R&D capabilities  and is developing a 
new seats offer from scratch , which is likely to have positive effects on 
innovation in the market . 
(88) Third, shifting purchases from a third party supplier to an in-house sourc e does 
not in itself and automatically amount to foreclosure. Such shifts would only be 
anticompetitive if the move to the in-house  source  harms the ability or 
incentives of rival s to compete. Internal documents of Boeing corroborate its 
argument according to which the creation of the Seats JV is a response to 
customer dissatisfaction  and an attempt  to improve the situation .86 A seat 
supplier replying to the Commission’s market investi gation confirm ed that 
timely deliveries and the quality of the products ha ve been a concern in the 
past.87 
                                                 
83  Parties’ response to RFI1, question 12 on 7 September, 2018.  
84  Boeing introduced a proposed IP licence in early 2015, along with a […]. 
85  Email of the Parties on 25 S eptember 2018 .  
86  Form CO, paragraph 80; and  internal presentation entitled  […], submitted  on 13 March 2018.  
87  See a seat vendor's reply to question 3 of the Commission's questionnaire of 6 September, 2018.  
 
21 (89) Fourth, a ircraft seat customers  (airlines and leasing companies) replying to the 
market investigation see the impact of the Transaction to be positive or neutral 
as long as Boeing does not impose the Seats JV  products on them as sole choice 
on certain aircraft p latforms.  An aircraft manufacturer confirm ed that it saw th e 
impact of the Transaction as neutral or positive  stating that "The proposed 
transaction is likely to lead to the entrant [sic] of a new market player and 
therefore to more choice and capacity in the market "88 Most of the aircraft seat 
suppliers also acknowledge that while the impact of the Transaction on their 
business may be negative, primarily due to the potential loss of turnover, the 
impact on the market and final customers is expected to be positive  as the 
creation of the Seats JV  will increase c hoice and decrease price levels  on the 
market for aircraft seats .89   
(90) Fifth, there are a number of smaller competitors – including  recent entrants – 
active in the seats markets,  indicating that also competitors with smaller scale 
operations are viable  and c ompetitive.  
(91) Sixth, Airbus’ integration into aircraft seats supply through its subsidiary Stelia 
has not led to negative effects on competition. None of the market participants  
raised concerns about foreclosure effects of Airbus’ integration into airc raft 
seats, in particular in first and business class sea ts. Furthermore, Airbus is a 
strong competitor in the downstream market for the sale of large commercial 
aircraft. Should a potential foreclosure strategy by Boeing negatively affect 
Airbus, it cannot be e xcluded that Airbus could decide to support third party 
aircraft seat suppliers in their business development or to rely to a larger extent 
on its own aircraft seats subsidiary Stelia.   
(92) Seventh , aircraft seats represent a relatively small portion of the co sts of the 
finished aircraft for the final customer , representing approximately [0-5]% of the 
list price of Boeing’s aircraft .90 Therefore, it is doubtful whether foreclosure 
from the seats market could have appreciable effects on the downstream markets 
for the sale of aircraft.   
(93) For the reasons set out in paragraphs (69)(67) to (92), the Commission considers 
that the Transaction does not raise customer or conglomerate foreclosure 
concerns.   
Access to commercially sensitive information  
(94) Paragraph 78 of the Commission’s Non -Horizontal Merger Guidelines notes the 
possibility that , by vertically integrat ing, the merged entity  may gain access to 
commercially sensitive information on the upstream or downstream activities of 
non-integrated rivals. As a result, competitors may be put at a competitive 
disadvantage thereby dissuading them to enter or expand in the market.   
                                                 
88  See an aircraft manufacturer's reply to question 2 of th e Commission's questionnaire of  6 September, 
2018.  […]. 
89  See replies to question 2 of the  Commission's questionnaire of 6 September, 2018.  
90  Response of the Parties of 10  September to the Commission’s request for information , question 7.  
 
22 (95) As regard s the application of those principles to the present case, the 
Commission notes, first, that several of the arguments discussed in 
paragraphs  (69)(67) to (92) also argue against significant adverse effects on the 
relevant markets of the  sharing of confidential information. For instance,  
(i) significant demand for aircraft seats  in a growing market is likely to remain 
available for third party seat manufacturers even if they reduce their sales of 
aircraft seats on Boeing  aircraft  due to t he risk of disclosing confidential 
information to the Seats  JV; (ii) Boeing is expecting to continue installing third 
party aircraft seats on its aircraft for years to come , driven among other reasons 
by the final customers’ preferences for the seats of ce rtain suppliers,  giving 
Boeing  incentives to find mutually satisfactory agreements with the seat 
manufacturers regarding their confidential information; (iii) the Seats  JV 
represents a new entrant, offering more choice and potentially boosting 
innovation also from incumbent seat manufacturers; and (iv) Airbus is likely to 
have means to react if adverse effects materialise or risk materialising on the 
seat markets.  
(96) Second,  business confidential information that is critical for the design, 
development and manufacture of aircraft seats can be protected under IP rights 
legislation. IP rights protection is enforceable in court and it confers a protection 
against any potential m isappropriation of sensitive information. Third party 
aircraft seat  suppliers can therefore have recourse to IP law to safeguard their IP 
rights and protect sensitive information.  
(97) Third, the exchange of confidential information related to the certification  and 
installation of aircraft seats by Boeing is covered by Proprietary Information  
Agreements  as set out in paragraph  (53).91 Those agreement s will prohibit the 
sharing of confidential information of competing aircraft seats suppliers with the 
Seats JV and can be enforced through litigation. Boeing has safeguards in place 
to limit the circulation of the confidential information and to implement the 
provisions of the  non-disclosure agreements as outlined in paragraphs  (54) 
and (55). 
(98) Fourth, aircraft seat suppliers do not seem to be concerned about selling aircraft 
seats on Airbus aircraft although Airbus’ subsidiary Stelia manufactures and 
sells aircraft seats and there is the potential risk that Airbus may pass on 
confidential inform ation to Stelia despite IP and contractual protections. This 
indicates that Airbus does not have the ability and incentives to pass on 
confidential information to Stelia, including that the market participants have 
been able to negotiate satisfactory solut ions for the protection of commercially 
sensitive information with the large aircraft manufacturer Airbus.  
(99) Fifth, insofar as one of the complaining aircraft seat suppliers refers to recent 
Commission precedents addressing concerns about the misappropriatio n of 
confidential information92, the Commission notes that the Seats JV is a new 
market entrant  and that the market is growing rapidly . Furthermore, Boeing will 
                                                 
91  One aircraft seat supplier complained about the a symmetry in sanction mechanism in the agreements. 
However, such asymmetry appears to relate only to […] and does not appear to relate to […]. 
92 Case M.8314, Broadcom/Brocade , paragraphs 104 -112, case M.7724, ASL/Arianespace , 
paragraphs  197-230.  
 
23 have to rely on third party aircraft seat  suppliers going forward  so that Boeing is 
unlikely to be in a position to negotiate confidentiality clauses in agreements 
with seats suppliers to their advantage in a disproportionate manner.  This is the 
more so the case, as the Parties […]. By contrast, other aircraft seats suppliers 
offer approximately a do zen product s that are either currently available or in 
development.  
(100)  Sixth, the Seat JV’s business model does not rely on the misappropriation of 
confidential information as alleged by one competing aircraft seat supplier. In 
particular, contrary to allegations raised during the market investigation, Adient  
has licensed in technology from a third party  for the development of its seating 
product "Ascent"93. In addition, the cooperation between Boeing and Adient94 
started as an R&D effort into seat development, which resulted in the creation of 
jointly owned intellectual property95 that is going  to be transferred to the 
Seats  JV. 
6.2.4.  Conclusion regarding vertical  and conglomerate  relationships  
(101)  Based on the assessment in paragraphs (60) to (100) , the Commission concludes  
that the Transaction does not raise  serious doubts as to its compatibility with the 
internal market with respect to the vertical  and conglomerate relationships 
brought about by the Transaction.  
7. CONCLUSION  
(102)  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 Regul ation and Article 57 of the EEA Agreement.  
For the Commission  
 
(Signed)  
Margrethe VESTAGER  
Member of the Commission  
                                                 
93  […], see the Parties' reply to question 5 of RFI 4 on 3 October, 2018.  
94  As per the Collaboration Agreement dated 7 July, 2016.  
95  Form CO, paragraphs 64 -66 and 262.