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 -MERGER -REGISTRY@ec.europa.eu.   EUROPEAN COMMISSION  
Brussels, 7.8.2020 
C(2020)  5556 final  
PUBLIC VERSION 
 
To the notifying parties  
Subject : Case M. 9771 — H itachi /Honda /HIAMS /Keihin /Showa /Nissin K ogyo  
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 7 July 2020, the European Commission received notification of a proposed 
concentration pursuant to Article 4 of the Merger Regulation by which Hitachi, Ltd. 
(“HTL”, Japan)  and Honda Motor Co., Ltd. (“Honda”, Japan) acquire within the 
meaning of Article 3(1)(b) and 3(4) of the Merger Regulation joint control of the 
whole of Hitachi Automotive Systems, Ltd (“HIAMS”, Japan), Keihin Corporation 
(“Keihin”, Japan), Showa Corporat ion (“Showa”, Japan) and Nissin Kogyo Co., Ltd 
(“Nissin Kogyo”, Japan)3. Honda and HTL  are designated hereinafter as the 
“Notifying P arties”  or “Parties to the proposed transaction” . HIAMS, Kei hin, Showa 
and Nissin Kogyo are designated hereinafter as the “T argets”.   
                                                 
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 European 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 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 C234, 16.07.2020 , p. 8. 
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  confidenti al information. The 
omissions are shown thus […]. Where 
possible the information omitted has been 
replaced by ranges of figures or a general 
description.  
 
2 1. THE PARTIES  
(2) HTL is a multinational conglomerate company and is the ultimate parent company of 
the Hitachi group of companies. HTL is a highly diversified company, mainly active 
in the manufacture and sale of products and services in the IT, ener gy, industry, 
mobility and smart life sectors . 
(3) Honda is the parent company of the Honda group of companies, and is active in the 
production and distribution of automobiles, motorcycles and power products.   
(4) HIAMS is active in the production and supply of a utomotive products and 
technologies. HIAMS is wholly owned by HTL.  
(5) Keihin is active in the manufacture and supply of electrification systems for hybrid 
and electric vehicles, engine management systems for gasoline and natural gas 
vehicles, and products for  fuel cells. As at 31 March 2019, Honda owned 41.35% of 
the voting rights in Keihin and was Keihin’s major shareholder, albeit it did not exert 
control over Keihin.4 The remainder of Keihin’s shares are widely held. Keihin is 
currently not controlled by any company or person for the purpose of the Merger 
Regulation.5 
(6) Showa is active in the manufacture and supply of components for automobiles, 
motorcycles and outboard motors. As at 31 March 2019, Honda owned 33.5% of the 
voting rights in Showa and was Showa’ s major shareholder, albeit it did not exert 
control over Showa.6 The remainder of Showa’s shares are widely held. Showa is 
currently not controlled by any company or person for the purpose of the Merger 
Regulation.7 
(7) Nissin Kogyo is active in the manufactu re and supply of integrated braking systems 
for vehicles.  As at 31 March 2019, Honda owned 34.86% of the voting rights in 
Nissin Kogyo and was Nissin Kogyo’s major shareholder, albeit it did not exert 
control over Nissin Kogyo.8 The remainder of Nissin Kog yo’s shares are widely 
held. Nissin Kogyo is currently not controlled by any company or person for the 
purpose of the Merger Regulation.9 
(8) Although prior to the concentration  Honda did not exercise control over Keihin, 
Showa and Nissin Kogyo, it had a strong purchase relationshi p with them  and was a 
major customer for most of the products giving rise to an affected market . 
                                                 
4  Attendance rates to shareholders’ meetings of the past three years show that Honda’s voting ratio over 
total voting rights exercised was below majority. Form CO, paragraph 1.35.  
5  Form CO, paragraph 1.35.  
6  Attendance rates to shareholders’ meeting s of the past three years show that Honda’s voting ratio over 
total voting rights exercised was below majority. Form CO, paragraph 1.37.  
7  Form CO, paragraph 1.37.  
8  Attendance rates to shareholders’ meetings of the past three years show that Honda’s vot ing ratio over 
total voting rights exercised was below majority. Form CO, paragraph 1.39.  
9  Form CO, paragraph 1.39.  
 
3 2. THE CONCENTRATION  
2.1. Interrelated transactions 
(9) The concentration is accomplished by way of purchase of shares. Pursuant to a 
single  agreement entered into between the Parties on 30 October 2019 (the 
Management Integration Agreement),10 Honda will conduct tender offers for the 
shares it does not already own in Keihin, Showa and Nissin Kogyo (the “First 
Step”) . Thereafter, each of Keihin, Nissin Kogyo and Showa will be amalgamated 
into HIAMS (“the Absorption Merger”) to form one company (the “ Integrated 
Company” ). In consideration, common shares representing 33.4% of the voting 
rights in the Integrated Company will be allotted to Honda (“the Second Step”). .11  
(10) Both the First Step and the Second Step have been agreed upfront by the Parties  
simultaneously, in a single agreement and are economically mutually dependent , in 
that as a matter of commercial reality the First Step would not occur absent th e 
Second Step.12 Pursuant to Article 7.1.1 of the Management Integration Agreement, 
the Parties  have agreed that the Second Step will occur promptly after the First Step. 
In this regard, pursuant to the Commission Consolidated Jurisdictional Notice under 
Council Regulation (EC) No 139/2004 on the control of concentrations between 
undertakings13 (“Consolidated Jurisdictional Notice”  or “CJN” ), indications of 
interdependence of transactions may be statements of the parties (such as those 
referenced in the press release relating to the proposed transaction)14 and 
simultaneous entry into the relevant agreements.15  
                                                 
10  Form CO, Annex 3.1.  
11  Pursuant to Article 7.1.1 of the Management Integration Agreement, the Parties  have agreed that the 
Second Step will occur promptly after the First Step.  
12  Form CO, paragraph 1.42.  
13  OJ C 95, 16.4.2008, p. 1.  
14  According to the press release: “Hitachi, Ltd. (TSE: 6501, “Hitachi”), Honda Motor Co., Ltd. (TSE: 7267, 
“Honda”), Hitachi Automotive Systems, Ltd. (“Hi tachi Automotive Syst ems”), Keihin Corporation 
(TSE: 7251, “Keihin”), Showa Corporation (TSE: 7274, “Showa”), a nd Nissin Kog yo Co., Ltd. 
(TSE: 7230, “Nissin”) hereby announce that these six companies have each resolved in their board of 
directors meetings held today that, on the precondition that permits and licenses, etc. can be obtained 
from the respective countries’ relevant authorities, including notification or approvals for business 
combination to or by the respective countries’ competition authoritie s, (a) Honda will conduct tender 
offers targeting the common shares of Keihin, Showa, and Nissin (collectively, the “Tender Offer”), (b) 
Honda will make each of Keihin, Showa, and Nissin its wholly -owned subsidiary (collectively, “Making 
the Target Companies Wholly- Owned Subsidiaries”), and (c) Hitachi Automotive Systems, Keihin, Showa, 
and Nissin will conduct an absorption -type merger in which Hitachi Automotive Systems will be the 
ultimate surviving company and Keihin, Showa, and Nissin will each be an ul timate disappearing 
company (the “Absorption- type Merger”), and will conclusively conduct a management integration (the 
“Integration”) to strengthen development and distribution of global and competitive solutions in the 
CASE area. These six companies have  also entered into a basic contract regarding management 
integration (the “Basic Contract”) . […] After the Tender Offer and Making the Target Companies 
Wholly -Owned Subsidiaries, the Absorption -type Merger of Hitachi Automotive Systems (a wholly -owned 
subsidiary of Hitachi) as the ultimate surviving company of the absorption -type merger and Keihin, 
Showa, and Nissin as the ultimate disappearing companies in the absorption- type merger will be 
implemented. Honda and Hitachi have agreed in the Basic Contract t hat in the Absorption -type Merger, 
common shares of the Integrated Company will be allotted to Honda as the consideration for the merger, 
in a merger ratio where the number of voting rights of the Integrated Company held by Hitachi and 
Honda will account f or 66.6% and 33.4% of the number of voting rights held by all shareholders of the 
Integrated Company, respectively.” See Form CO, Annex 3.3.  
15  CJN, paragraph 43.   
 
4 (11) The First Step will not therefore bring about a change of control on a lasting basis 
for the purpose of Article 3(1) of the Merger Regulation. Accordingl y, the proposed 
transaction  (comprising the First Step and the Second Step) constitute a single 
concentration for the purpose of the Merger Regulation.16 
2.2. Full-function 
(12) The Integrated Company will operate as a full -function joint venture in that it will 
play an active role on the market and will be economically autonomous from HTL 
and Honda from an operational viewpoint:17 
(a) The Integrated Company will consist of four entities that already operate 
autonomously on the market, with access to sufficient resources i ncluding 
finance, staff, and assets (tangible and intangible) to conduct their business 
activities on a lasting basis.  The Integrated Company will continue to have 
its own sales team, R&D resources, and production facilities to manufacture 
and supply its products to the market.  In addition, the Integrated Company 
will have a management dedicated to its day- to-day operations. […] the 
Integrated Company will establish […] as the deliberative and decision -
making body for important managerial issues of the Integrated Company, and 
the members […] will include […] appointed by […].  
(b) The Integrated Company will continue to operate as a market -facing 
business, providing automotive components to third party customers, and so 
it is not the case that the Integrated Co mpany's activities will be limited to 
carrying out a specific function for HTL or Honda. 
(c) The Integrated Company will consist of entities that already have a track 
record of operating autonomously on the market, with their own customer 
base.  The Parties' i ntention is that the Integrated Company will continue to 
be reliant on third party sales.  Reflective of this, it is not the intention that 
the Integrated Company will be heavily reliant on sales to Honda. For 
example, Honda currently accounts for [Percent age of HIAMS’ sales of 
component parts accounted for by Honda] % of HIAMS’ total sales of 
component parts  and, on a weighted average basis,  the Targets’ combined 
total sales to the Parents account  for approximately [Percentage of Parents’ 
sales of component  parts accounted for by the Targets] % of their total sales .18 
Furthermore,  sales between the Targets and their Parents will be at arm’s 
length, on normal commercial conditions :19 as confirmed by the Notifying 
Parties, [Details of supply and purchase arrangem ents of the Parties] , 
therefore, Honda will be supplied by the Targets on the same terms as other 
third parties.20 
(d) The Integrated Company will be formed by the amalgamation of four pre -
existing entities that already operate on the market and the Parties' in tention 
                                                 
16  Consolidated Jurisdictional Notice, paragraph 43.  
17  Form CO, paragraphs 1.51 to 1.55.  
18  Reply to question 1 of RFI 21.  
19  Reply to RFI 19.  
20  Reply to question 1 of RFI 21.  
 
5 is that the Integrated Company will continue to operate on the market on a 
lasting basis. 
2.3. Joint control  
(13) Pursuant to an agreement entered into between HTL and Honda on 30 October 2019 
(the “Subsidiary Integration Agreement”),21 HTL will own 66.6% and Honda will 
own 33.4% of the voting rights of the Integrated Company.  
(14) The Subsidiary Integration Agreement provides that HTL will have the right to 
appoint the majority of directors to the board of directors of the Integrated Company 
(the “Integrated Company Board”): the Integrated Company Board shall have six 
directors in total, of which HTL may nominate four and Honda may nominate two. 
[Description of provisions in the agreement entered into between HTL and Honda] .22 
(15) [Description of provisions in the agre ement entered into between HTL and Honda] .23 
(16) The Notifying Parties note that similar procedures for the approval of the annual 
business plan and budget were used in a previous joint venture between HIAMS and 
Honda in Case COMP/M.8485 – Hitachi Group / Honda  / JV. In that case, the 
Commission concluded that the joint venture in question was jointly controlled by 
HIAMS and Honda  […]. On that basis, the joint venture fell within the jurisdiction 
of the Merger Regulation,  and was notified to and approved by the Commission.24 
The Notifying Parties have confirmed that [ Description of provisions in the 
agreement entered into between HTL and Honda] .25 
(17) Pursuant to the CJN and  the Commission’s  decisional practice, joint control can be 
exercised on a de facto basis, where as a matter of practice the shareholders must 
reach a common understanding in determining the commercial policy of the joint 
venture.26 According to the CJN, “[…] collective action can occur on a de facto 
basis where strong common interests exist between t he minority shareholders to the 
effect that they would not act against each other in exercising their rights in relation 
to the joint venture ”27 and “[i] ndicative for such a commonality of interests is a high 
degree of mutual dependency as between the parent companies to reach the strategic 
objectives of the joint venture. This is in particular the case when each parent 
company provides a contribution to the joint venture which is vital for its operation 
(e.g. specific technologies, local know -how or supply agreements) ”.28 Pursuant to the 
CJN,  de facto joint control may also arise as a result of decision making procedures 
– such as those envisaged under [Description of provisions in the agreement entered 
into between HTL and Honda]  – which are “ tailored in suc h a way as to allow the 
                                                 
21  Form CO, Annex 3.2.  
22  Form CO, paragraph 1.45.  
23  Form CO, paragraphs 1.46 and 1.47.  
24  Form CO, paragraph 1.49.  
25  Reply to RFI 18.  
26  CJN, paragraph 78.  
27  CJN, pa ragraph 76.  
28  CJN, paragraph 77.  
 
6 parent companies to exercise joint control even in the absence of explicit agreements 
granting veto rights ”.29  
(18) In the case of the Integrated Company there will be a strong commonality of 
interests between the shareholders, consisten t with the arrangements in relation to 
the proposed transaction requiring  that [Description of provisions in the agreement 
entered into between HTL and Honda].30 This commonality of interests is reflected 
in the following elements:  
(a) Importance of Honda as a customer of the Integrated Company:   while the 
specific products and volumes that the Integrated Company will supply to 
Honda has still to be determined, the Parties consider that the proportion of 
their total sales of component parts that Honda currently accounts for 
provides a reasonable proxy for the expected importance of Honda as a 
customer of the Integrated Company.  Honda accounts for approximately 
[Percentage of HIAMS' sales of component parts accounted for by Honda] % 
of HIAMS' total sales of compon ent parts.  However, for each of Showa, 
Keihin and Nissin Kogyo the proportion of sales that Honda accounts for is 
significantly higher:  
– Keihin: Honda accounts for approximately [Percentage of total sales 
of component parts accounted for by Honda] % of its total sales of 
component parts;  
– Showa: Honda accounts for approximately [Percentage of total sales 
of component parts accounted for by Honda] % of its total sales of 
component parts;  
– Nissin Kogyo: Honda accounts for approximately [Percentage of total 
sales of component parts accounted for by Honda] % of its total sales 
of component parts.  
(b) Importance of the IP licensed by Honda to the Integrated 
Company: [Licensing practices of Honda] .31 [Licensing practices of Honda] :  
– Keihin: [Licensing practices of Honda] . 
– Showa: [Licensing practices of Honda] . 
– Nissin Kogyo: [Licensing practices of Honda] . 
(c) Importance of the corporate functions provided by Honda to the Integrated 
Company:  [Description of future corporate functions and supply arrangement 
between Honda and the Integrated Company] . 
                                                 
29  CJN, paragraph 77.  
30  Form CO, paragraph 1.50.  
31  In addition to these existing licences, it is expected that Honda and the Integrated Company will enter into 
further licensing agreements.   The precise details are still  to be determined, but these are expected to relate 
to [Details of the licensing agreements between Honda and the Integrated Company] .   The IP licences 
that will exist between Honda and the Integrated Company will therefore likely be  directly related to 
[Description of provisions in the agreement entered into between HTL and Honda] . 
 
7 (d) Importance of the Honda personnel transferred to the Integrated 
Company. [Details of employment arrangements with Honda] : 
– Keihin: [Details of employment arrangements with Honda] . 
– Showa: [Details of employment arrangements with Honda] . 
– Nissin Kogyo: [Details of employment arrangements with Honda] . 
(19) Because of the strong commonality of interest s between Honda and the Integrated 
Company, Honda will exercise de facto joint control over the Integrated Company 
together with HTL  [Description of c ommercial arrangement between HTL and 
Honda] .  
(20) As a result of the proposed concentration, the Integrated Company will be jointly 
controlled by HTL and Honda. 
3. EU DIMENSION  
(21) The undertakings concerned have a combined aggregate world- wide turnover of 
more than EUR 5 000 million (HTL: EUR […] million; Honda: EUR […] million; 
Keihin: EUR […] million; Showa: EUR […] million; Nissin Kogyo: EUR […]  
million).32 At least two of them has an EU -wide turnover in excess of 
EUR 250 million  (Hitachi: EUR […] million33; Honda:  EUR […] million; Keihin: 
EUR […] million; Showa: EUR […]  million; Nissin Kogyo: EUR […] million), but 
not each of the undertakings concerned achieves  more than two- thirds of its 
aggregate EU -wide turnover within one and the same Member State. The notified  
operation therefore has an EU dimension within the meaning of Article 1(2) of the 
Merger Regulation .  
4. COMPETITIVE ASSESSMEN T 
(22) The concentration gives rise to affected markets only in the original equipment 
manufacturers (OEM) segment. Therefore, the affect ed markets cited in this decision 
refer only to the OEM segment.34  
4.1. Number of horizontally affected markets  
(23) Worldwide, t he activities of the Notifying Parties and the Targets result in two 
horizontally affected markets in relation to the following component s for use in 
motorcycles: floating caliper s and brake pads (as an assembled product) , and brake 
                                                 
32  Turnover calculated in accordance with Article 5 of the Merger Regulation.  
33  The turnover for HIAMS is consolidated within the turnover of the HTL Group.  
34  The Notifying P arties have confirmed that no affected markets would arise for any plausible market 
segmentation from their sales of motorcycle and automotive component parts in the independent 
aftermarket (“IAM”), under any plausible geographic market definition. They al so confirmed that no 
affected markets would arise from sales of components for general purpose applications or automotive 
component parts for heavy commercial vehicles. Reply to question 5 of RFI 1 of 16 April 2020.  

 
9 (25) In the EEA, t he activities of the Parties and the Targets result in vertically affected 
markets due to market shares exceeding 30% in an upstream  component market in 
relation to floating caliper s and brake pads (as an assembled product)  for use in 
motorcycles . 
(26) Worldwide, t he activities of the Parties and the Targets result in vertically affected 
markets due to market shares exceeding 30% in an upstream  component market in 
relation to airflow sensors for use in passenger cars, and the following components 
for use in motorcycles : engine control units “ ECUs ”, carburettors, fuel pump 
modules, injectors, brake master cylinders, floating caliper s and brake pads (as an 
assembled product) , and shock absorbers.  
(27) Given Honda’s market share of [30 -40]% in the downstream  market for motorcycles 
at worldwide level, the following markets are also vertically affected.   
i. In the EEA and worldwide additional vertically affected markets are:  
 
- Electronic t hrottle bodies (upstream) – motorcycles (downstream)  
- Anti-lock braking systems (“ABS”) (upstream) – motorcycles (downstream)  
- Brake pads (as a non -assembled component) (upstream) – motorcycles 
(downstream)  
- Floating caliper s (non -assembled) (upstream) – mo torcycles (downstream)  
- Panel brakes (upstream) – motorcycles (downstream)  
 
ii. Additional vertically affected markets at w orldwide level only:  
 
- Combined brake systems “ CBS ” (upstream) – motorcycles (downstream)  
- Fixed caliper s and brake pads (assembled) (upst ream) – motorcycles 
(downstream)  
- Fixed caliper s (as a non -assembled component) (upstream) – motorcycles 
(downstream)  
- Drivetrain systems (shaft drive) (upstream) – motorcycles (downstream)  
- Handle lever brackets (upstream) – motorcycles (downstream )  
- Speed m eter gears (upstream) – motorcycles (downstream)  
 
4.3. Market definition  
(28) The Targets are active in  the manufacture and sale of  motorcycle and automotive 
components such as engine management and injection systems (airflow sensors, 
ECUs, carburettors, fuel pump modules , injectors and electronic throttle bodies), 
braking systems (brake master cylinders, caliper s and brake pads, ABS, CBS, panel 
brakes) and anti -vibration systems  (shock absorbers) and others ( drivetrain systems , 
speed meter gears and handle lever bra ckets for motorcycles ).  
(29) Some components are only used in motorcycles, some only in passenger cars, and 
some in both: airflow sensors are only used in cars, whereas carburettors, panel 
brakes, handle lever brackets, CBS , speed meter gears and drivetrain sy stems are 
only used in motorcycles. All other components are parts of passenger cars and 
motorcycles, although the Parties do not produce  all these components for passenger 
cars and motorcycles (the second column of  Table 1 shows which products the 
Parties produce for passenger cars, which for motorcycles and which for both).  
 
10 (30) In the market for automotive parts and components, t he transaction gives rise to one 
vertically affected market, namely air flow sensors.  
(31) In th e market for motorcycle parts and components, t he transaction gives rise to two 
horizontally affected and 19 vertically affected markets for the sale of components 
(see paragraphs (24)  and (27)). Below the Commission provides an analysis of the 
market definition for those products where market shares at upstream level exceed 
30%.  
4.3.1. Automotive and motorcycle parts and components overall  
4.3.1.1. Product market  
(A) The Commission’s deci sional practice  
(32) The Commission has consistently defined the relevant product market for the 
manufacture and supply of automotive components on a product -by-product basis,38  
and has left open whether there may be a wider market comprising automotive 
compone nts, modules and systems, or separate markets for “components” and 
“modules”.39 Within the market for automotive parts and components, the 
Commission has also further made the following segmentations:40 (a) depending on 
the type of  vehicles for which the product is supplied (Light Vehicles and Heavy 
Commercial Vehicles);41 and (b) depending on the distribution channel to which the 
product is supplied (OEMs and independent aftermarket ( IAM )42).   
(33) The Commission has not specifically addressed the product market f or the 
manufacture and sale of motorcycle components. 
(B) The Notifying P arties’ views 
(34) The Notifying Parties do not contest the product market definition for automotive 
components  described in the Commission’s precedents cited above .43  
(35) The Targets  produce components both for small motorcycles (with an  engine size 
below 250cc) and for large motorcycles (with an engine size above 250cc). 
However, the Notifying Parties submit that components for use in motorcycles of all 
sizes should be considered to belong to the  same product market. This is because, 
from the demand side perspective, components for use in all sizes of motorcycles are 
                                                 
38  Case COMP/M.7420 ZF/TRW, paragraph 9; Case COMP/M.6714 U -Shin/Valeo CAM, paragraph 6.  
39  The term “modules” refers to a number of pre -assembled individual components that fulfil a certain 
function in the ve hicle and are delivered to the original equipment manufacturers  (OEMs) as a single unit.  
Case COMP/M.7182 Visteon Corporation/Automotive Electronics Business of Johnson Controls, 
paragraphs  14-18; Case COMP/M.6714 U -Shin/Valeo CAM, paragraph 6; Case COMP/ M.5799 
Faurecia/Plastal, paragraphs 7 - 12. 
40  Case COMP/M.7420 - ZF/TRW, paragraph 10.  
41  The Parties  only sell de minimis  volumes of automotive component parts for heavy commercial vehicles 
(i.e., vehicles above six tons) and confirm that no affected mark ets would arise for any plausible market 
segmentation from their sales of component parts for automotive component parts for heavy commercial 
vehicles. Therefore this Decision will not further discuss these.  
42  As mentioned in footnote 34 , no affected market would arise for the IAM market under any plausible 
product and geographic market definition. Therefore this segmentation will not be further discussed in this 
Decision.  
43  Reply to RFI 7.   
 
11 substitutable, due to the fact that the structure, size and shape of such components 
are the same, regardless of the size of mo torcy cle that they are used in.  From the 
supply side, suppliers are easily able to switch production between manufacturing 
components for different sizes of motorcycles, within a short time frame and without 
requiring a large amount of capital investment, as the production processes for all 
components (regardless of size of motorbike for end use) is very similar.44 
(36) The Notifying Parties note that for components used in both passenger cars and 
motorcycles, supply- substitutability suggests that a broader market def inition might 
be considered.  The Notifying Parties submit that such substitutability applies for 
brake  master cylinders, floating  caliper s, fixed caliper s, brake pads , ECUs, fuel 
pump modules, injectors and electronic throttle bodies.45 On the other hand, t he 
Notifying Parties submit that there is no supply side substitutability  for ABS for 
passenger cars and for motorcycles, and for shock absorbers for passenger cars and 
for motorcycles .46 Finally,  the Notifying Parties submit that airflow sensors are only 
supplied for passenger cars, while carburettors, panel brakes, CBS , speed meter 
gears and drive train systems ar e only supplied for motorcycles.47  
(C) The Commission’s assessment  
(37) The Commission considers that for the purpose of the present case, its decisional 
practice related to automotive components, as outlined in paragraph (32)  can be 
maintained. In its market investigation, the Commission tested whether this practice 
can be applied to the motorcycle components it investigated in a similar way. The 
results of the market investigation showed that whereas  from a demand -side 
perspective some markets can be further segmented into types of each components, 
the same companies usually produce all different types of these p roducts.48 
(38) The Commission also investigated the argument of the Parties that no sub -
segmentation between components for small motorcycles and components for large 
motorcycles should be made. A majority49 of customers and competitors considers 
that components  for small motorcycles are not the same as components for large 
motorcycles.50 Several respondents and a majority of competitors noted that all 
components being investigated differ between small and large motorcycles in 
performance and size and are therefor e not substitutable, for instance “ large 
motorcycles have different suspensions and brakes due to different performances 
and mass. In case of ECUs, smaller bikes have simpler engines and less electronic 
functionalities. […] In terms of contribution margin, large motorcycles are more 
likely to use more expensive [components] ”51 However, there appears to be supply -
                                                 
44  Form CO, paragraph 1.464  
45  Reply to question 4 of RFI 7.  
46  In view of the time and expenses for manufacturers to switch manufacturing lines for products for use in 
motorcycles and for use in passenger cars, the Notifying Parties do not consider that there is supply sid e 
substitutability (Reply to question 4 of RFI 7) .  
47  Reply to question 4 of RFI 7.  
48  Replies to question 6 of questionnaire to customers and question 6 of questionnaire to competitors.  
49  “Majority” in this Decision stands for more than 50% of the part icipants in the market investigation who 
replied to the question (excluding those that replied “other”, or “I do not know”).  
50  Replies to question 4 of questionnaire to customers and replies to question 4 of questionnaire to 
competitors.  
51  Non-confidenti al reply to question 4.1 of questionnaire to competitors.  
 
12 side substitutability as the market investigation confirmed that the same companies 
manufacture components for both small and large motorcycles.52 A customer 
summarised that “ in general all components for large 2wheelers are also used for 
small 2wheelers but size, function and characteristics can differ”.53 
(39) The Commission also investigated the argument of the Parties that no sub -
segmentation between com ponents for motorcycles and components for passenger 
cars should be made . The market investigation  was inconclusive as to whether the 
component markets should be divided by passenger car and motorcycle  component . 
In particular, a majority of respondents in  the market investigation confirmed that 
components for passenger cars differ from components for use in motorcycles.54 As 
a customer explained, “The principle and general functionality of the listed 
components are comparable for 2wheeler and 4wheeler but y ou cannot use the same 
ECU, Fuel pump... for both vehicle types ”.55 Competitors confirmed this  as well:  
“Technical and functional characteristics, performances and liabilities of 
automotive components for passenger cars are generally different from components 
for motorcycles.”56 
(40) However, there appears to be a high degree of supply- side substitutability  between 
automotive and motorcycle components . A majority of respondents in the  market 
investigation confirmed that the same companies that produce the motorcyc le 
components in question also produce these components for passenger cars (ECUs, 
fuel pump modules, injectors, brake master cylinders, floating caliper s and shock 
absorbers).57 As a competitor confirmed, “ Normally, production technologies of car 
and motorc ycle parts are the same.”58  
(41) In conclusion, the Commission will leave open whether one product market exists 
for automotive and motorcycle components . As for automotive components  (i.e. not 
used in motorcycles) , the Commission will retain the product market definition 
provided in its past decisional practice as described in paragraph (32) . For 
components  that are also, or exclusively used in motorcycles , it can be left open 
whether a distinction should be made betw een components for large and for small 
motorcycles.59  
                                                 
52  Replies to question 6 of questionnaire to customers and question 6 of questionnaire to competitors.  
53  Non-confidential reply to question 4.1 of questionnaire to customers.  
54  Replies to question  2 of questionnaire to customers and replies to question 2 of questionnaire to 
competitors.  
55  Non-confidential reply to question 2.1 of questionnaire to customers.  
56  Non-confidential reply to question 2.1 of questionnaire to competitors.  
57  Replies to qu estion 3 of questionnaire to customers and replies to question 3 of questionnaire to 
competitors.  
58  Non-confidential reply to question 3.1 of questionnaire to competitors.  
59  The Notifying Parties confirmed that their market shares for components for large and small motorcycles 
separately do not materially differ from the market shares of each particular component market as a 
whole. Therefore, the competitive analysis focuses on the Integrated Company’s market share for the 
specific component market as a whole. (Reply to question 1 of RFI 9.) Where an affected market arises 
only under a narrower product market definition (for small motorcycles), it will be discussed in the 
competitive analysis.   
 
13 4.3.1.2. Geographic market  
(A) The Commission’s decisional practice 
(42) In previous decisions, the Commission has found that the geographic markets for the 
manufacture and supply of OEM automotive components are at least EEA -wide, and 
possibly worldwide, but has left open the precise definition.60 In a recent case, th e 
existence of at least EEA -wide markets was justified as follows: i) the Parties 
operate d worldwide; ii) OEMs increasingly source products at worldwide leve l; iii) 
within the EEA, transport costs are not significant; iv) product regulation and safety 
standards are set at EEA level; v) there are no obstacles to intra- EEA trade and vi) 
prices are similar throughout the EEA.61 
(43) The Commission has not specifically addressed the geographic market for the 
manufacture and  sale of motorcycle components.   
(B) The Notifying Parties’ views  
(44) The Notify ing P arties consider the markets for  the manufacture and supply of all 
automotive and motorcycle components discussed in this De cision to be worldwide 
in scope. According to the Notifying Parties, this worldwide market definition 
follows from the fact that t ransport costs are low: in many cases, the Notifying 
Parties estimate that transport costs per unit amount to [Percentage of t he price of the 
component comprised of transport costs] % of the price of the component. In 
addition, the Notifying Parties submit that there are no specific trade barriers and 
these products are traded globally.62  
(C) The Commission’s assessment  
(45) The market investigation  confirmed that the market for the manufacture and sale of  
OEM automotive and motorcycle components is at least EEA -wide, if not 
worldwide . A vast majority of customers purchase original automotive and 
motorcycle components at a worldwide  level.63 Specifically for motorcycle 
components, a majority of customers confirmed that motorcycle components are 
usually shipped globally and that transport costs are low.64 Even though some 
European motorcycle manufacturers purchase a large proportion of components in 
the EEA, they nevertheless make their purchase decisions based on comparisons 
with suppliers worldwide, as a competitor explained: “[company name]  in general  
purchases motorcycles components mostly (circa 75%) in Europe; however the 
driver for the ch oice is also the know -how and quality  and competitiveness of the 
components thus various suppliers are located outside Europe ”.65  
                                                 
60  Case COMP/M.6714 -  U-Shin/Valeo CAM, paragraphs 30 -33; Cas e COMP/M.6207 -  Gestamp/ TKMF, 
paragraphs 30- 33; Case COMP/M.5799 - Faurecia/Plastal, paragraphs 13 -15.  
61  Case COMP/M.6714 - U-Shin/Valeo CAM, paragraph 27.  
62  Form CO, paragraph 1.181 (for engine management/injection systems); paragraph 1.194 (for braki ng 
systems); paragraph 1.203 (for shock absorbers).  
63  Reply to question 7 of questionnaire to customers.  
64  Reply to question 8 of questionnaire to customers.  
65  Non-confidential reply to question 9 of questionnaire to competitors.  
 
14 (46) For the purposes of this decision, the Commission therefore considers that it can be 
left open whether the geographic market f or manufacture and sale of the automotive 
and motorcycle components under investigation is defined as EEA -wide or 
worldwide , as the  proposed transaction does not raise any competition concerns, 
irrespective of the exact market definition  adopted.  
4.3.2. Automoti ve airflow sensors   
(47) Airflow sensors are one of the key components of an electronic fuel injection system 
and measure the amount of air entering the car engine. They are not  currently used  in 
motorcycles.66 
4.3.2.1. Product market  
(A) The Commission’s decisional practic e 
(48) The Commission has not previously considered a separate product market for 
manufacture and sale of airflow sensors for automobiles . However , in previous cases 
involving other sensors for automobiles, it considered each type of automotive 
sensor to consti tute a separate product market based on its area of employment.  This 
concerned, for example, temperature sensors, pressure sensors, fluidity level sensors, 
speed sensors and acceleration sensors.  The Commission found that as each of these  
sensor s has a dif ferent function, namely to measur e specific information for the 
vehicle, they are not substitutable from a demand -side perspective. Also, producers 
of sensors cannot easily switch their production from one type of sensor to the other, 
which is why separate  product markets per sensor function are justified  also from a 
supply- side perspective .67  
(B) The Notifying Parties’ view  
(49) The Notifying Parties submit that the product market for automotive airflow sensors 
is the narrowest relevant segmentation.68 They note tha t given the high degree of 
supply- side substitutability, no further sub- segmentation  by different variations of 
airflow sensors is necessary. For instance, the equipment required to manufacture 
airflow sensors for gasoline and diesel passenger cars is the same. Therefore, 
manufacturers are able to produce such components without any additional 
investment or time delay.69  
(50) In relation to single/ standalone  mass airflow sensors and airflow sensors with 
integrated additional features with pressure/humidity,70 manufacturers are able to 
produce these components without significant investments. The Parties estimate that 
it would take [Parties’ estimate of switching costs]  to start production of  airflow 
sensors with integrated additional features with pressure/humidity.71  
                                                 
66  Form CO, paragraph 1 .320.  
67  Case COMP/M.4878 - Continental / Siemens VDO paragraphs 38 -39 and cases cited therein.  
68  Form CO, table 16.  
69  Reply to RFI 7, para 1.1.  
70  These variants were mentioned by respondents to the market investigation.  
71  Reply to RFI 7, para 1.2.  
 
15 (C) The Commission’s assessment  
(51) In line with its previous practice, t he Commission considers  that each automotive 
sensor  fulfilling a different function constitutes a separate product market, and the 
results of the market investigation did not contest thi s. As for the possibility of a 
further sub -segmentation of airflow sensors, i n the market investigation , a 
competitor  mentioned the following possible segments of air flow sensors for 
automobiles , confirming that it  produces “ all different types of air flow  sensors with 
customer specific programmable output ” and that the different types are “relatively 
easy to produce ”:   
– Gasoline and diesel air flow sensors.  
– Single/ standalone  mass airflow sensors and airflow sensors with 
integrated additional features with pressure/humidity.72 
(52) While there are different types of airflow sensors, the different types are easy to 
produce , so there is supply -wide substitutability.  As automotive airflow sensors all 
fulfil the same function, namely measuring the amount of air flowin g into the 
engine, demand- side substitutability  was also confirmed in the market 
investigation.73 As a respondent  in the market investigation explained, “ In case of 
sensors, different technologies might be used in order to make the same kind of 
measurement .”74 
(53) Therefore, the Commission concludes that the relevant product market is the market 
for manufacture and sale of automotive  airflow sensors .75  
(54) In any event, for the purpose of the present decision, the exact product market 
definition can ultimately be lef t open76 as the proposed transaction does not raise 
serious doubts as to its compatibility with the internal market under any plausible 
market definition.  
                                                 
72  Reply to question 6 of questionnaire to competitors.  
73  Replies to question 6 of questionnaire to competitors and to question 6 of questionnaire to customers.  
74  Non-confidential reply to question 2.1 to questionnaire to competitors.  
75  Given the low re sponse rate in the market investigation, the Commission enquired whether a further 
segmentation of the market for airflow sensors would give rise to competition concerns. The Notifying 
Parties have confirmed that the Integrated Company’s market share in an y of these product sub -
segmentations do not materially differ from the market shares of the Integrated Company in the airflow 
sensors market as a whole. Therefore, the competitive analysis focuses on the Integrated Company’s 
market share for the market for  airflow sensors for use in passenger cars as a whole. (Reply to question 1 
of RFI 9).  
76  Between different types of airflow sensors mentioned or an overall market. For the different types of 
airflow sensors, the Notifying Parties have confirmed that the I ntegrated Company’s market share in any 
of these product sub- segmentations do not materially differ from the market shares of the Integrated 
Company in the market for airflow sensors as a whole (Reply to question 1 of RFI 9).  
 
16 4.3.2.2. Geographic market  
(A) The Commission’s decisional practice 
(55) The Commission has not previously analysed th e market for of airflow sensors for 
passenger cars.   In previous cases where the Commission analysed the market for 
automotive sensors, it defined the market as at least EEA -wide.77 
(B) The Notifying Parties’ view  
(56) As outlined in paragraph (44), the Notifying Parties c onsider that all markets for 
engine management and injection systems, including the market for air flow sensors , 
should be analysed at a worldwide level  for the purpose of this Decision.78 
(C) The Commission’s assessment  
(57) In line with its decisional practice and  the findings of the market investigation  
outlined in paragraph (45), for the purposes of this Decision it can be left open 
whether the geographic market is defined as EEA -wide or worldwide, as the 
proposed transaction does not raise any serious doubts as to its compatibility with 
the internal market under any plausible market definition adopted.  
4.3.3. ECUs and electronic throttle bodies  
(58) Like airflow sensors, ECUs and electronic throttle bodies are key components of the 
engine management system.79  
(59) An electronic throttle body is a mechanism that supplies air to the engine, controlled 
by an ECU.80  
(60) Based on information from sensors, an ECU controls the amount and timing of fuel 
flowing through the fuel injectors into the combustion chamber, the amount of air 
passing through the throttle body and the timing of the ignition spark which ignites 
the fuel in engines. ECUs are used in a variety of engines (including diesel and 
gasoline -powered engines for automobiles, motorcycles and general purpose 
engines, such as small ships or power generators).  
4.3.3.1. Product market  
(A) The Commission’s decisional practice 
(61) The Commission has previously identified potential separate markets for the suppl y 
of ECUs and electronic throttle bodies. The Commission also previously concluded 
that each ECU used in a different area of employment constitutes a separate market. 
For instance, in Continental / Siemens VDO, the Commission found separate markets 
                                                 
77  See e.g. Case COMP/M.5244 - ZF / CHERRY, paragraph 15.  
78  Form CO, paragraph 1.181.  
79  Form CO, paragraph 1.84.  
80  Form CO, paragraph 1.86.  
 
17 for (i) gasoline ECUs, (ii) diesel ECUs for passenger cars and light vehicles and 
(iii) diesel ECUs for heavy vehicles.81   
(B) The Notifying Parties’ view  
(62) The Notifying Parties agree that ECUs  and electronic throttle bodies  each constitute  
separate product  market s and that , within ECUs, a distinction may be drawn between 
ECUs used in gasoline and diesel -powered engines.82 However, the Notifying Parties 
submit that there is no need to conclude on such a distinction in this case as no 
competition concerns arise even on a  the narrowest plausible market .83  
(63) The Notifying Parties consider that it would be appropriate to define a single market 
for the supply of ECUs for use in both motorcycles and passenger cars, in view of 
the supply side substitutability between these produc ts. The same should apply to 
electronic throttle bodies.84   Suppliers are easily able to switch production between 
these components for use in motorcycles and passenger cars, within a short time 
frame and without requiring a large amount of capital investm ent, as the production 
processes for these components is very similar.85   
(64) As outlined in paragraph (35) , the Notifying Parties consider that a sub- segmentation 
between ECUs for small and large motorcycles , or ele ctronic throttle bodies for use 
in small large motorcycles,  is not justified.  
(65) The Notifying Parties submit that no segmentation is required w ith regard to 
different types of ECUs,  as manufacturers would be able to produce such variations 
without significa nt additional investment or time delay.86  
(C) The Commission’s assessment  
(66) The Commission considers that the previous practice to distinguish between diesel 
and gasoline ECUs, and within diesel ECUs for light and heavy vehicles can be 
maintained for the purpose s of the present decision.87 It should be noted that these 
distinctions are relevant for ECUs for use in passenger cars, whereas the results of 
the market investigation suggest that different distinctions  might be relevant for 
ECUs used in motorcycles. Dist inctions  mentioned by respondents are the following:  
- ECUs capable of e- gas and not capable of e -gas,88 
                                                 
81  Case COMP/M.4878 - Continental / Siemens VDO, paragraph 18.  
82  HIAMS and Keihin’s activities overlap in the supply of ECUs used in gasoline -powered passenger cars in 
the EEA, but no affected market arises. Keihin supplies ECUs for use in small motorcycles resulting in a 
vertically affected market at worldwide level.  
83  Form CO, paragraph 1.165.  
84  Reply to RFI 8, paragraph 1.6(v).  
85  Reply t o RFI 7, Table 11.  
86  Reply to RFI 7, paragraph 1.4 and reply to RFI 9.  
87  The Notifying Parties confirm that their combined market shares at both an EEA and worldwide level, 
remain below 20% under any of these plausible market definitions for automotive E CUs. (Reply to 
question 10, RFI 1 of 16 April 2020.)  
88  Fuel cell vehicles use hydrogen as fuel. They produce electricity and water by mixing hydrogen gas and 
oxygen in the cell stack, and that electricity is used as energy to power the car. The balance b etween 
hydrogen gas and oxygen has to be properly maintained so that the fuel cell can produce electricity safely 
and efficiently. This ECU is used to regulate such a balance. (Reply to RFI14, Annex 1).  
 
18 - Fuel powered and electric powered ECUs,89 
- Single cylinder and multi cylinder ECUs, 90 
(67) A majority of respondents confirmed that there is no demand- side subst itutability, 
neither between ECUs for passenger cars and for motorcycles,91 nor between small 
and large motorcycles.92 However, t he market investigation confirmed  supply- side 
substitutability  between ECUs for passenger cars and for motorcycles,  as 
manufactur ers usually produce all types  of ECUs ,93 and a majority of respondent s 
replied that the same suppliers produce all types of ECUs , both for passenger cars 
and motorcycles.94 A competitor explained that “ ECU in general are 
engine/customer specific components” . This indicates that ECUs are bespoke 
products  (i.e. suppliers manufacture a slightly different type of ECU not only for 
each OEM but for each vehicle model)  and therefore a single market for manufacture 
and sale of all ECUs , including ECUs for small/large  motorcycles, 
motorcycles/passenger cars and different types as mentioned in the market 
investigation, might be warranted.95 
(68) The market investigation did not find the need for a further segmentation of the 
market for supply of electronic throttle bodies.96 Therefore,  the Commission will 
retain its practice to define a separate market for the manufacture and sale of 
electronic throttle bodies.  
(69) In any event, for the purpose of the present decision, the exact product market 
definition can ultimately be left open97 as the proposed transaction does not raise 
serious doubts as to its compatibility with the internal market under any plausible 
market definition .  
                                                 
89  A fuel powered ECU is a component used to control the engine so that the vehicle can be driven. An 
electric powered ECU controls the power -generation and drive motors in hybrid and electric vehicles 
during start off, acceleration, and deceleration. ( Reply to RFI14, Annex 1).  
90  Replies to question 6 of questionnaire to competitors.  
91  Replies to question 2 of questionnaire to customers and replies to question 2 of questionnaire to 
competitors.  
92  Replies to question 5 of questionnaire to customers and replies to question 5 of questionnaire to 
competitors . 
93  Replies to question 6 of questionnaire to customers and replies to question 6 of questionnaire to 
competitors.  
94  Replies to question 3 and 6 of questionnaire to customers and replies to question 3 and 6 of questionnaire 
to competitors.  
95  Non-confide ntial reply to question 2.1 and to question 6 of questionnaire to competitors.  
96  Replies to question 6 of questionnaire to customers and replies to question 6 of questionnaire to 
competitors.  
97  Between ECUs (i) for small and large motorcycles separately or combined and (ii) for passengers cars and 
motorcycles separately or combined, (iii) the different types mentioned or an overall market. For the 
different types of ECUs, the Notifying Parties have confirmed that the Integrated Company’s market share 
in any of these product sub- segmentations do not materially differ from the market shares of the Integrated 
Company in the market for ECUs as a whole (Reply to question 1 of RFI 9). As for the distinction 
between (i) large and small motorcycles and (ii) motorc ycles and passenger car component, the 
competitive analysis focuses on the market definitions under which affected markets would arise.  
 
19 4.3.3.2. Geographic market  
(A) The Commission’s decisional practice 
(70) In previous cases, t he Commission considered  the ge ographic market for the 
manufacture and sale of ECUs  to be  at least EEA -wide , if not  worldwide.98  
(B) The Notifying Parties’ view  
(71) The Notifying Parties submit that the appropriate geographic market for the supply 
of component parts for all engine management and injection systems, the product 
category including ECUs  and electronic throttle bodies, is worldwide. Transport 
costs are low: in many cases, the Notifying Parties estimate that transport costs per 
unit amount to [Percentage of the price of the component comprised of transport 
costs] % of the price of the component part. In addition, there are no specific trade 
barriers and these products are traded globally . In fact , Keihin does not manufacture 
component parts for engine management and injection systems in  the EEA and all its 
sales are achieved through import.99  
(72) In any event, the Notifying Parties submit that the geographic market definition can 
be left open as the proposed transaction will not raise any competition concerns, 
irrespective of the exact market definition.100 
(C) The Commission’s assessment  
(73) The market investigation did not find that the geographic market for the manufacture 
and sale of ECUs and electronic throttle bodies diverges from the general finding 
that the geographic market for automotive and motorcycle components  at least EEA -
wide .101  
(74) In line with its  decisional practice and  the findings of the market investigation 
outlined in paragraph (45), for the purposes of this Decision it can be left open 
wheth er the geographic market is defined as EEA -wide or worldwide, as the 
proposed transaction does not raise any serious doubts as to its compatibility with 
the internal market under any plausible market definition adopted.  
4.3.4. Carburettors   
(75) A carburettor is a mechanical apparatus used to premix vaporised fuel and air in 
proper proportions and supplying the mixture to a motorcycle internal combustion 
engine.102 
                                                 
98  Case COMP/M.4878 – Continental / Siemens VDO, paragraphs 50- 51. 
99  Form CO, paragraph 1.181.  
100  Form CO, paragraph 1 .183.  
101  Replies to question 7.1 of questionnaire to customers and replies to questions 8.1. and 9.1 of questionnaire 
to competitors.  
102  Form CO, paragraph 1.318.  
 
20 4.3.4.1. Product market  
(A) The Commission’s decisional practice 
(76) The Commission has not previously considered a product  market for the supply of 
carburettors.  In cases concerning other components of internal combustion engines, 
the Commission has found that each component constitutes a different product 
market, with a further subdivision based on the size of the engine (as  the cases 
concerned the automotive market, the dist inction was drawn between components 
for light duty applications and components for heavy duty applications).103  
(B) The Notifying Parties’ view  
(77) The Notifying Parties submit that the overall  market for the man ufacture and sale of 
carburettors  is the narrowest relevant segmentation.104 The Parties submit that  
carburettors are only used for motorcycles , not any more  for passenger cars, and that,  
for the purposes of this Decision, the relevant product market should be the market 
for the manufacture and sale of carburettors  for motorcycles .105 
(78) As outlined in paragraph (35) , the Notifying Parties consider that a sub- segmentation 
between carburettors  for small and large motorcyc les is not justified.  
(C) The Commission’s assessment  
(79) The Commission considers that, in line with its previous decisional practice, the 
relevant market is carburettors for motorcycles, and a further possible distinction 
between carburettors for small and for l arge motorcycles. This was confirmed by t he 
market investigation which found that carburettors for small motorcycles are 
different from carburettors for large motorcycles .106  
(80) However, the market investigation also confirmed that there is a high degree of  
supply- wide substitutability  between carburettors  for small and for large 
motorcycles , as the same suppliers usually produce all types of carburettors.107 
(81) In any event, for the purpose of the present decision, the exact product market 
definition can ultimately  be left open108 as the proposed transaction does not raise 
serious doubts as to its compatibility with the internal market under any plausible 
market definition.  
                                                 
103  Case COMP/M.4456 - MAHLE / DANA EPG, paragraph 8 . 
104  Form CO, table 16.  
105  Form CO, table 20. 
106  Replies to question 5 of questionnaire to customers and replies to question 5 of questionnaire to 
competitors.  
107  Replies to question 3 and 6 of questionnaire to customers and replies to question 3 and 6 of questionnaire 
to competitors.  
108  Between carburettors for small and large motorcycles separately or combined. The competitive analysis 
focuses on the market definitions under which affected markets would arise.  
 
21 4.3.4.2. Geographic market  
(A) The Commission’s decisional practice 
(82) The Commission has not previously anal ysed the market for the supply of 
carburettors , or other motorcycle components . For automotive components, the 
Commission found that the geographic markets for the manufacture and supply of 
OEM automotive components are at least EEA -wide, and possibly worl dwide, but 
has left open the precise definition ( see paragraph (42) ). 
(B) The Notifying Parties’ view  
(83) The Notifying Parties submit that the appropriate geographic market for the supply 
of component parts for engine m anagement and injection systems, the product 
category including carburettors, is worldwide, as explained in paragraph (71). 
(C) The Commission’s assessment  
(84) In line with its decisional practice and  the findings of the market investigation 
outlined in paragraph (45), for the purposes of this Decision it can be left open 
whether the geographic market is defined as EEA -wide or worldwide, as the 
proposed transaction does not rai se any serious doubts as to its compatibility with 
the internal market under any plausible market definition adopted.  
4.3.5. Fuel pump modules  
(85) A fuel pump module filters fuel from the fuel tank and uses a pump to retrieve fuel 
from the tank and pressurise it. T he module features a built -in pressure regulator to 
maintain constant pressure for supply to the injectors.109 
4.3.5.1. Product market  
(A) The Commission’s decisional practice 
(86) The Commission has not previously considered a product market for the supply of 
fuel pump modules. In cases concerning other components of internal combustion 
engines, the Commission has found that each component constitutes a different 
product market, with a further subdivision based on the size of the engine (as the 
cases concerned the automotive market, the distinction was drawn between 
components for light duty applications and components for heavy duty 
applications).110  
(B) The Notifying Parties’ view  
(87) The Notifying Parties submit that the relevant product market is the market for the 
supply of fuel pump modules  without any further segmentation per type .111 With 
regard to fuel pump modules for motorcycles with different tank shapes and sizes, 
top-mount/bottom -mount, mounted inside/outside fuel tank, the Notifying Parties 
                                                 
109  Form CO, paragraph 1.90.  
110  Case COMP/M.4456 - MAHLE / DANA EPG, paragraph 8 . 
111  Form CO, paragraphs 1.175 and 1.235.  
 
22 submit that manufacturers would be able to produce such variations without 
significant additional investment or time delay.112 
(88) The Notifying Parties consider that it would be appropriate to define a single market 
for the supply of fuel pump modules for use in both motorcycles and passenger  cars, 
in view of the supply side substitutability between these products. 113 Suppliers are 
easily able to switch production between components for use in motorcycles and 
passenger cars, within a short time frame and without requiring a large amount of 
capital investment, as the production processes for these components are very 
similar.114   
(89) As outlined in paragraph (35) , the Notifying Parties consider that a sub- segmentation 
between fuel pump modules for small and large motorcycles is not justified.  
(C) The Commission’s assessment  
(90) In the market investigation, some respondents mentioned the following possible 
segments of fuel pump modules:  
- Fuel pump modules for different tank shapes and sizes, top- mount/bottom -
mount, m ounted inside/outside fuel tank  
- Low and high flow rate115 
(91) A majority of respondents in the market investigation confirmed that there is no 
demand- side substitutability, neither between fuel pump modules for passenger cars 
and for motorcycles, nor between the se inputs for small and large motorcycles,116 
The reason is that fuel pump module s for motorcycles have “ different flow and 
pressure requiremen ts, different geometry”117 than fuel pump module s used in 
passenger cars, so that they are not substitutable. However , as fuel pump module s 
are less complex than most other products discussed in the market investigation, 
such as brake components, they “ need less effort to interchange ”.118  
(92) The market investigation confirmed supply- side substitutability as a majority of 
respondent replied that the same suppliers produce all types of fuel pump modules , 
both for passenger cars and for motor cycles.119 
(93) In any event, for the purpose of the present decision, the exact product market 
definition can ultimately be left open120 as the pro posed transaction  does not raise 
                                                 
112  Reply to RFI 7, paragraph 1.6.  
113  Reply to RFI 8, paragraph 1.6(v).  
114  Reply to RFI 7, Table 11.  
115  The Notifying Parties have confirmed that the Integrated Company’s market share in any of these product 
sub-segmentati ons do not materially differ from the market shares of the Integrated Company in the fuel 
pump module market as a whole. Therefore, the competitive analysis focuses on the Integrated 
Company’s market share for the fuel pump module market as a whole. Reply to question 1 of RFI 9.  
116  Replies to questions 2 and 4 of questionnaire to customers and replies to questions 2 and 4 of 
questionnaire to competitors.  
117  Non-confidential reply to question 2.1 of questionnaire to competitors.  
118  Non-confidential replies t o question 2.1. of questionnaire to competitors.  
119  Replies to question 3 and 6 of questionnaire to customers and replies to question 3 and 6 of questionnaire 
to competitors.  
 
23 serious doubts as to its compatibility with the internal market under any plausible 
market definition.  
4.3.5.2. Geographic market  
(A) The Commission’s decisional practice 
(94) The Commission has not previously analysed the market for the s upply of fuel pump 
modules. For automotive components, the Commission generally found that the 
geographic markets for the manufacture and supply of OEM automotive components 
are at least EEA -wide, and possibly worldwide, but has left open the precise 
defin ition (see paragraph (42) ). 
(B) The Notifying Parties’ view  
(95) The Notifying Parties submit that the appropriate geographic market for the supply 
of component parts for engine management and injection systems, the product 
category including fuel pump modules, is worldwide, as explained in paragraph (71) . 
(C) The Commission’s assessment  
(96) In line with its decisional practice and  the findings of the market investigation 
outlined in par agraph (45), for the purposes of this Decision it can be left open 
whether the geographic market is defined as EEA -wide or worldwide, as the 
proposed transaction does not raise any serious doubts as to its compat ibility with 
the internal market under any plausible market definition adopted.  
4.3.6. Injectors  
(97) Fuel injectors are a part of the fuel injection system (a system which mixes fuel with 
air) which, when signalled by an ECU , open up to spray pressurised fuel into t he 
engine.121  
4.3.6.1. Product market  
(A) The Commission’s decisional practice 
(98) The Commission has previously identified a potential separate product market for 
diesel injectors, with a potential sub- segmentation for use in light vehicles as 
opposed to heavy vehicles.122  
                                                                                                                                                      
120  Between fuel pump modules (i) for small and large motorcycles separately or co mbined and (ii) for 
passengers cars and motorcycles separately or combined, (iii) the different types mentioned or an overall 
market. For the different types of fuel pump modules, the Notifying Parties have confirmed that the 
Integrated Company’s market sh are in any of these product sub- segmentations do not materially differ 
from the market shares of the Integrated Company in the market for fuel pump modules as a whole (Reply 
to question 1 of RFI 9). As for the distinction between (i) large and small motorc ycles and (ii) motorcycles 
and passenger car component, the competitive analysis focuses on the market definitions under which 
affected markets would arise.  
121  Form CO, paragraph 1.91.  
122  Case COMP/M.6640 – Delphi / FCI, paragraph 32.  
 
24 (B) The Notifying Parties’ view  
(99) The Notifying Parties consider that engines are distinguished by the location of the 
injector that injects fuel (direct- injection and port injection).123 
(100)  Direct -injection engines use a method in which the injector directly injects the fuel 
into the combustion chamber of the engine. On the other hand, port -injection engines 
use a method in which fuel is injected into the inlet port that supplies air to the 
engine.124 
(101)  Therefore, the Notifying Parties submit that the Commission should distinguish 
between injectors used in (i) direct injection engines or port injection engines 
(ii) hydrogen fuel cell vehicles or natural gas vehicles ,125 (iii) motorcycles and 
passenger cars126 or other applications (such as  outboard engines127). 
(102)  With regard to injectors for motorcycles with different types of engine s, variations in 
spray pattern requirements, the length of the injector body or fixation methods, the 
Notifying Parties submit that manufacturers would be able to produce such 
variations without signi ficant additional investment or time delay.128 
(103)  The Notifying Parties consider that it would be appropriate to define a single market 
for the supply of injectors for use in both motorcycles and passenger cars, in view of 
the supply side substitutability betwe en these products.129 Suppliers are easily able to 
switch production between components for use in motorcycles and passenger cars, 
within a short time frame and without requiring a large amount of capital investment, 
as the production processes for these com ponents is very similar.130   
(104)  As outlined in paragraph (35) , the Notifying Parties consider that a sub- segmentation 
between injectors for small and large motorcycles is not justified.131 
(C) The Commission’s assessment  
(105)  The Commission considers that it s previous market definition for  diesel injectors can 
be maintained for the purposes of the present case.132 In the market investigation, 
some respondents mentioned the following variations of injectors:  
- Injectors depending on the type of engine , variations in spray pattern 
requirements, length of injector body and fixation method.133  
                                                 
123  Form CO, paragraph  1.92.  
124  Form CO, paragraph 1.92.  
125  The Notifying Parties confirmed that no affected markets arise from their activities in the markets for 
injectors used in hydrogen fuel cell vehicles and natural gas vehicles, separately or on a combined basis. 
(Reply to RFI14, paragraph 9.1).  
126  Replies to RFI14, paragraph 8.1.  
127  An outboard engine units placed on boats for propulsion. The Notifying Parties confirmed that no affected 
market arises for injectors used in outboard engines or any other component used in o utboard engines. 
(Reply to RFI14, paragraph 10.2)  
128  Reply to RFI 7, paragraph 1.8.  
129  Reply to RFI 8, paragraph 1.6(v).  
130  Reply to RFI 7, Table 11.  
131  Form CO, paragraph 1.179.  
132  The injectors supplied by the Parties  are for use in gasoline engines, the refore the market for diesel engine 
injectors will not be further discussed.  
 
25 (106)  A vast majority of both competitors and customers confirmed that the same 
companies produce injectors for passenger cars and motorcycles.134 In this  case, it 
appears that indeed injectors are the same for motorcycles and cars,135 as well as for 
small and large motorcycles, as a majority of competitors confirmed ,136 as they 
“need less effort to interchange due to less complexity” and therefore “to some 
extent, there is a carry -over from car to MC possible”.137 
(107)  In any event, for the purpose of the present decision, the exact product market 
definition can ultimately be left open138 as the proposed transaction does not raise 
serious doubts as to its compatibility with the internal market under any plausible 
market definition.  
4.3.6.2. Geographic market  
(A) The Commission’s decisional practice 
(108)  The Commission found the market for diesel injectors to be at least EEA -wide , if not 
worldwide.139 
(B) The Notifying Parties’ view  
(109)  The Notifying Parties consider the market for the supply of all component parts for 
engine management and  injection systems , the product category including injectors,  
as worldwide , as explained in paragraph (71) . 
(C) The Commi ssion’s assessment  
(110)  In line with its decisional practice and  the findings of the market investigation 
outlined in paragraph (45), for the purposes of this Decision it can be left open 
whether the geographic market  is defined as EEA -wide or worldwide, as the 
proposed transaction does not raise any serious doubts as to its compatibility with 
the internal market under any plausible market definition adopted.  
                                                                                                                                                      
133  The Notifying Parties have confirmed that the Integrated Company’s market share in any of these product 
sub-segmentations do not materially differ from the market shares of the  Integrated Company in the 
injector market as a whole. Therefore, the competitive analysis focuses on the Integrated Company’s 
market share for the injector market as a whole. Reply to question 1 of RFI 9.  
134  Replies to question 3 of questionnaire to custo mers and replies to question 3 of questionnaire to 
competitors.  
135  Replies to question 2 of questionnaire to customers and replies to question 2 of questionnaire to 
competitors.  
136  Replies to question 5 of questionnaire to customers and replies to question  5 of questionnaire to 
competitors.  
137  Non-confidential replies to question 2.1 of questionnaire to competitors.  
138  Between injectors (i) for small and large motorcycles separately or combined and (ii) for passengers cars 
and motorcycles separately or comb ined, (iii) the different types mentioned or an overall market. For the 
different types of injectors, the Notifying Parties have confirmed that the Integrated Company’s market 
share in any of these product sub -segmentations do not materially differ from the market shares of the 
Integrated Company in the market for injectors as a whole (Reply to question 1 of RFI 9). As for the 
distinction between (i) large and small motorcycles and (ii) motorcycles and passenger car component, the 
competitive analysis focus es on the market definitions under which affected markets would arise.  
139  Case COMP/M.6640 – Delphi / FCI, paragraph 44 and cases cited therein.  
 
26 4.3.7. Brake master cylinders  
(111)  A brake master cylinder is a component of a hydraulic braking system that converts 
the force exerted on the brake pedal into hydraulic pressure to apply the brakes by 
establishing a liquid linkage between the master cylinder's pistons and the caliper s 
and wheel cylinders.140  
4.3.7.1. Product market  
(A) The Commission’s decisional practice 
(112)  With regard to braking systems for automobiles ,141 in a previous decision the 
Commission distinguished between pneumatic and hydraulic brakes . Moreover , due 
to the essential technical and commercial differences, the Commission considered 
that hydraulic braking systems for lighter vehicles and commercial vehicle brakes for 
heavy vehicles are two separate markets. The Commission has not previously 
considered a separate product market for brake master cylinders for motorcycles, but 
analysed them as parts of hydraulic braking systems without further defining the 
market.142 For pneumatic braking systems, the Commission distinguished between: 
(a) air supply/actuation systems, and therein further be tween (i) air compressors, 
(ii) air  dryers and (iii) other parts of actuation systems; (b) foundation brakes, and 
therein further (i) drum brakes and (ii) disc brakes; and (c) brake and chassis control 
and therein further between (i) anti -lock braking systems ( ABS ), (ii) traction control 
system (TCS, also known as ASR)  and (iii) electronic braking systems ( EBS). 143  
(B) The Notifying Parties’ view  
(113)  The Notifying Parties consider that it would be appropriate to define a single market 
for the supply of brake master cylinders for use in both motorcyc les and passenger 
cars, in view of the supply side substitutability between these products .144 Supplier s 
can switch between manufacturing brake master cylinders for use in passenger cars 
and motorcycles without particular difficulty. The Parties estimate tha t any switch 
would require [Parties’ estimate of switching costs] .145 
(114)  As outlined in paragraph (35) , the Notifying Parties consider that a sub- segmentation 
between brake master cylinder s for small and large motorcycles is not justified.  
(C) The Commission’s assessment  
(115)  While precedents have not dealt with brake master cylinders for motorcycles but as 
part of hydraulic brake systems, based on its decisional practice to define a separate 
product market for each component of pneumatic braking systems (see 
paragraph (112) ), the Commission  considers that the relevant product market is 
brake master cylinders. The market investigation indicated that a further sub-
                                                 
140  Form CO, paragraph 1.108.  
141  Case IV/M.1342 – Knorr -Bremse/Bosch; Case IV/M.768 – Lucas / Varity, paragraph 10. 
142  Case IV/M.726 – Bosch/Allied Signal.  
143  Case COMP/M.7174 – Federal -Mogul Corporation / Honeywell Friction Materials, paragraphs 10 and 13; 
Case IV/M.726 – Bosch/Allied Signal, paragraph 12; Case IV/M.337 –  Knorr -Bremse / Allied Signal, 
paragraphs 25- 27. 
144  Reply to RFI 9, paragraph 1.3(vi).  
145  Reply to RFI 7, paragraph 3.1.  
 
27 segmentation between brake master cylinders for (i) passenger cars and (ii) brake 
master cylinders for motorcycles and between small and large motorcycles cannot be 
excluded.  
(116)  A majority of respondents in the market investigation confirmed that there is no 
demand- side substitu tability, neither between brake master cylinders for passenger 
cars and for motorcycles, nor between small and large motorcycles. “ Brake and 
suspension parts for motorcycles are very special. They do not fit into cars. ”146 The 
reason, as respondents explaine d is that motorcycles require fewer connections than 
automobiles, the differences in weight and sizing restrictions for motorcycles require 
different dimensions. Finally, motorcycles are more exposed to water and dirt.147 
(117)  However, the market investigation confirmed supply- side substitutability as a 
majority of respondents replied that the same suppliers produce all types of brake 
master cylinders, both for passenger cars and for motorcycles .148 
(118)  In the market investigation, some respondents mentioned the followi ng possible 
segments: radial and tangential brake master cylinders.149 
(119)  In any event, for the purpose of the present decision, the exact product market 
definition can ultimately be left open150 as the proposed transaction does not raise 
serious doubts as to its  compatibility with the internal market under any plausible 
market definition.  
4.3.7.2. Geographic market  
(A) The Commission’s decisional practice 
(120)  The Commission has not previously analysed  a geographic market for brake master 
cylinders. In relation to the supply of components parts for braking systems, the 
Commission has considered (but ultimately left open) that (a) the geographic market 
                                                 
146  Non-confidential reply to question 2.1 of questionnaire to competitors.  
147  Replies to question 2.1 of questionnaire to competitors.  
148  Replies to question 3 and 6 of questionna ire to customers and replies to question 3 and 6 of questionnaire 
to competitors.  
149  Non-confidential reply to question 6 of questionnaire to competitors.  In a radial brake master cylinder, the 
direction of piston ejection is radial to the direction of bra ke lever installation, and in a tangential brake 
master cylinder the direction of piston ejection is tangential to the direction of brake lever installation. 
Brake master cylinders as a whole are used in both motorcycles and passenger cars. However, the 
distinction between radial and tangential brake master cylinder is motorcycle specific. The Notifying 
Parties have confirmed that the Integrated Company’s market share in any of these product sub -
segmentations do not materially differ from the market shares of the Integrated Company in the brake 
master cylinder market as a whole. Therefore, the competitive analysis focuses on the Integrated 
Company’s market share for the brake master cylinder market as a whole. (Reply to question 1 of RFI 9).  
150  Between brake  master cylinders (i) for small and large motorcycles separately or combined and (ii) for 
passengers cars and motorcycles separately or combined, (iii) the different types mentioned or an overall 
market. For the different types of brake master cylinder, th e Notifying Parties have confirmed that the 
Integrated Company’s market share in any of these product sub -segmentations do not materially differ 
from the market shares of the Integrated Company in the market for brake master cylinders as a whole 
(Reply to question 1 of RFI 9). As for the distinction between (i) large and small motorcycles and 
(ii) motorcycles and passenger car component, the competitive analysis focuses on the market definitions 
under which affected markets would arise.  
 
28 for supply of these products to the OEM channel customers may be EEA -wide in 
scope, if not worldwide . 151 
(B) The Notifying Parties’ vie w 
(121)  The Notifying Parties submit that the appropriate geographic market for the supply 
of components of braking systems , the product category including brake master 
cylinders, is worldwide. Transport costs are low: in many cases, the Notifying 
Parties estimate that transport costs per unit amount to [Percentage of the price of the 
component comprised of transport costs] % of the price of the component. In 
addition, there are no specific trade barriers and these products are traded globally.152 
(C) The Commission’s assessment  
(122)  In line with its decisional practice and  the findings of the market investigation 
outlined in paragraph (45), for the purposes of this Decision it can be left open 
whether the geographic market is defined as EEA -wide or worldwide, as the 
proposed transaction does not raise any serious doubts as to its compatibility with 
the internal market under any plausible market definition adopted.  
4.3.8. Caliper s and brake pads  
(123)  Caliper s and brake pads are two of the three component parts of disc brakes (the 
other being the brake disc/rotor). A disc brake is a brake system that controls the 
rotation of a wheel by pressing a friction material (brake pad) from both sides of a 
brake rotor that rotates along with the wheel.153 
(124)  There are two principal types of calipers : floating calipers and fixed calipers. 
Floating calipers are those that move relative to the brake disc and have one or two 
pistons.  Fixed calipers do not move relative to the brake disc and have more than 
two pisto ns. Each is typically also combined with a different type of brake discs.154 
(125)  Brake pads are pieces of friction -generating material which are fitted to either side of 
the caliper . As the operator applies the brakes, the pressure stored by the brake fluid 
pushes a piston against the caliper . This causes the caliper  to squeeze the brake pads 
against the brake disc, which in turn slows down the spinning wheel by restricting its 
ability to move freely. When this process happens simultaneously on all wheels of a 
vehicle, it will slow vehicle down in a controlled manner and will eventually bring 
the vehicle to a stop.155 
4.3.8.1. Product market  
(A) The Commission’s decisional practice 
(126)  Within disc brakes, the Commission distinguished between (a) calipers and, therein, 
further betwe en (i) floating calipers and (ii) fixed calipers; and (b) the friction 
                                                 
151  Case COMP/M.7174 –  Federal -Mogul Corporation / Honeywell Friction Materials, paragraphs 18 to 23; 
Case COMP/M.4878 - Continental / Siemens VDO paragraphs 50 -51. 
152  Form CO, paragraph 1.194.  
153  Form CO, paragraph 1.102.  
154  Form CO, paragraph 1.104.  
155  Reply to RFI17, paragr aph 3.3.  
 
29 materials that form inputs to disc brakes, namely brake pads.156 This resulted from 
the fact that calipers differ in size, performance, quality and price. Fixed calipers 
have more than tw o pistons and are made from aluminium, whereas floating calipers 
have one or two pistons and are made from cast iron or cast iron/aluminium. 
Accordingly, the ( foundry and machining) equipment used for the production of 
fixed calipers is different from the equipment of floating calipers. From a demand 
side, floating calipers and  fixed calipers are used with different types of  brake discs, 
for different types of vehicles .157 The Commission has also previously identified 
different markets for each different comp onent of a braking system, e.g. brake 
pads.158 
(B) The Notifying Parties’ view  
(127)  The Notifying Parties note that caliper s and brake pads are often supplied to OEM 
customers together as an assembled product. OEM customers usually then attach the 
brake discs themsel ves, to create the fully assembled disc brake. Alternatively, 
caliper s and brake pads can each be supplied separately as standalone components. 
Further, components for caliper s can also be supplied separately.159  
(128)  The Notifying Parties consider that it would  be appropriate to define a single market 
for the supply of floating caliper s and brake pads (assembled) for use in both 
motorcycles and passenger cars, in view of the supply side substitutability between 
these products.160 Suppliers can switch between manuf acturing floating caliper s and 
brake pads (assembled) for use in passenger cars and motorcycles [Parties’ estimate 
of switching costs] .161 
(129)  As outlined in paragraph (35) , the Notifying Parties consider that a sub- segmentation 
between caliper s and brake pads for small and large motorcycles is not justified.  
(C) The Commission’s assessment  
(130)  The Commission considers that for the purposes of the present case, its previous 
decisional practice can be maintained. The market inv estigation did not raise further 
sub segmentations in addition to those the Commission previously identified.  
(131)  Competitors for this product also confirmed the argument of the Parties that floating 
caliper s and brake pads are usually supplied to OEMs as an assembled product , as a 
competing producer of this product confirmed:  (“[name of competitor] manufacture 
caliper s internally and procure pads from suppliers, pads are then assembled into 
the caliper s. So for us it is common practice to obtain pads separate ly and assemble 
them in calipers. […] To our knowledge this is the common practice among 
motorcycle brake manufacturers. ”)162 
                                                 
156  Case COMP/M.5484 – SGL Carbon / Brembo / BCBS / JV, paragraphs 24 to 28.  
157  Case COMP/M.5484 – SGL Carbon / Brembo / BCBS / JV, paragraphs 24 to 28.  
158  See Case IV/M. 726 - Bosch/Allied Signal, para. 9 seq.  
159  Form CO, paragraph 1.105.  
160  Reply to RFI 8, paragraph 1.6(v).  
161  Reply to RFI 7, paragraph 3.2.  
162  Reply to RFI to a competitor.  
 
30 (132)  In the market investigation, a  majority of respondents confirmed that there is no 
demand- side substitutability, neither between cali pers for passenger cars and for 
motorcycles, nor between small and large motorcycles. However, the market 
investigation confirmed supply- side substitutability as a majority of respondents 
replied that the same suppliers produce all types of caliper s, both for passenger cars 
and for motorcycles.163  
(133)  For the purposes of this Decision, the Commission will consider all plausible 
markets, including market for assembled and non -assembled products : 
- floating caliper s and brake pads (as an assembled product)  
- floating caliper s (as a non -assembled product)  
- brake pads (as a non -assembled product)  
- fixed caliper s and brake pads (as an assembled product)  
- fixed caliper s (as a non -assembled product).  
(134)  In any event, for the purpose of the present decision, the exact product ma rket 
definition can ultimately be left open164 as the proposed transaction does not raise 
serious doubts as to its compatibility with the internal market under any plausible 
market definition.  
4.3.8.2. Geographic market  
(A) The Commission’s decisional practice 
(135)  In relation to the supply of components parts for braking systems, the Commission 
has considered (but ultimately left open) that the geographic market for supply of 
caliper s to the OEM channel customers may be EEA -wide in scope, if not 
worldwide.165 
(B) The Notifying Pa rties’ view  
(136)  The Notifying Parties submit that the appropriate geographic market for the supply 
of components of braking systems, the product category including caliper s and brake 
pads, can be left open between EEA -wide and worldwide , as outlined in 
paragra ph (121) .  
                                                 
163  Replies to question 3 and 6 of questionnaire to customers and replies to question 3 and 6 of questionnaire 
to competitors.  
164  Between calipers and brake pads (i) for small and large motorcycles separately or combined and (ii) for 
passengers cars and motorcycles separately or combined, (iii) floating/fixed calipers/brake pads as 
components or the different types as assembled products. The competitive analysis focuses on the market 
definitions under which affected markets would arise.  
165  Case COMP/M.7174 – Federal -Mogul Corporation / Honeywell Friction Materials, paragraphs 18 to 23; 
Case COMP/M.4878 - Continental / Siemens VDO paragraphs 50 -51; Case IV/M.726 – Bosch/Allied 
Signal, paragraph 20; Case IV/M.337 – Knorr -Bremse / Allied Signal, paragraphs 30 and 31.  
 
31 (C) The Commission’s assessment  
(137)  In line with its decisional practice and  the findings of the market investigation 
outlined in paragraph (45), for the purposes of  this Decision it can be left open 
whether the geographic market is defined as EEA -wide or worldwide, as the 
proposed transaction does not raise any serious doubts as to its compatibility with 
the internal market under any plausible market definition adopt ed. 
4.3.9. Anti-lock braking systems (ABS)  
(138)  ABS are parts of electronic braking systems which optimise braking pressure across 
wheels and assist in steering stability while braking.166  
4.3.9.1. Product market  
(A) The Commission’s decisional practice  
(139)  In previous decisions, the Commission has defined a market for electronic brake 
systems but left open whether a segmentation between ABS and Electronic Stability 
Control (ESC) is necessary.167 This potential segmentation was based on the finding 
that, as a result of the different tech nical designs of air pressure brakes and hydraulic 
brakes, the ABS and the components of the system are also different. The ABS and 
the components of the system are adapted to the respective mode of braking power 
generation and transmission and are closely related to the braking system. It is not 
possible to replace the ABS for hydraulic brakes with that for air pressure brakes.168 
(B) The Notifying Parties’ view  
(140)  The Notifying Parties submit that the market for electronic braking systems is the 
relevant product m arket, and that it is not necessary to further segment between ABS 
and ESC.169 They submit that there is no supply -side substitutability between AB S 
for motorcycles and ABS for passenger cars.  
(141)  As outlined in paragraph (35) , the Notifying Parties consider that a sub- segmentation 
between ABS  for small and large motorcycles is not justified.  
(C) The Commission’s assessment  
(142)  The Commission considers that the distinction between ABS and ESC can be 
maintained for the purposes of the present case, as no affected markets arise for ESC 
as a component used in heavy duty applications, as outlined in paragraph (112) .170 
As the Parties are only selling ABS for motorcycles, the Commission will analyse 
this narrower market, while leaving open whether a distinction should be made 
between ABS for passenger cars and ABS for motorcy cles.  
                                                 
166  RFI 14, Annex 1.  
167  Case COMP/M.2421 – Continental / Temic; Case COMP/M.5294 - Schaeffler / Continental  
168  Case IV/M.726 – Bosch/Allied Signal, paragrap h 14.  
169  Reply to RFI14, Annex 1.  
170  As confirmed by the Notifying Parties in their reply to RFI 16.  
 
32 (143)  In any event, for the purpose of the present decision, the exact product market 
definition can ultimately be left open171 as the proposed transaction does not raise 
serious doubts as to its compatibility with the internal market under any plausible 
market definition.  
4.3.9.2. Geographic market  
(A) The Commission’s decisional practice  
(144)  In Bosch/Allied Signal , the Commission defined the market for ABS as EEA -wide, 
as it found that most OEMs in the EEA were purchasing ABS from suppliers 
established in the EEA. For reasons of security of supply and their close cooperation 
in the development and production of ABS, vehicle manufacturers expect their 
suppliers to produce in proximity to their factories. In competition for supply 
contracts, the supplier has a decisive advantage which can make the parts available 
at the vehicle manufacturers’ manufacturing sites in a timely and demand -driven  
manner. For this reason, almost all suppliers of vehicle manufacturers in the EEA 
had set up production facilities in Europe.172 
(B) The Notifying Parties’ view  
(145)  The Notifying Parties submit that the appropriate geographic market for the supply 
of components of braking systems, the product category including ABS, is 
worldwide. The Notifying Parties submit that transport costs are low: in many cases, 
the Notifying Parties estimate that transport costs per unit amount to [Percentage of 
the price of the component comprised of transport costs] % of the price of the 
component. In addition, there are no specific trade barriers and these products are 
traded globally.173 
(C) The Commission’s assessment  
(146)  The Commission notes that since its assessment of the ABS market in Bosch/All ied 
Signal (in 1996), it is likely that supply chains have become more global, as the 
results of the market investigation, outlined in paragraph (37), as well as the more 
recent automotive component cases cited in this Decision show. In any case, for the 
purposes of this Decision, it can be left open whether the geographic market is 
defined as EEA -wide or worldwide, as the proposed transaction does not raise any 
serious doubts as to its compatibility with the internal market under any plausible 
market defin ition adopted.  
4.3.10. Shock absorbers  
(147)  Shock absorbers (also known as dampers) form part of a vehicle’s suspension 
system, and are used to control the impact and rebound movement of a vehicle’s 
                                                 
171  Between ABS (i) for small and large motorcycles separately or combined and (ii) for passengers cars and 
motorcycles separately or combined, (iii) ABS an d ECS separately or an overall market. For ECS, the 
Notifying Parties have confirmed that no affected market arises under any plausible market definition 
(Reply to question 4 of RFI 17). As for the distinction between (i) large and small motorcycles and (i i) 
motorcycles and passenger car component, the competitive analysis focuses on the market definitions 
under which affected markets would arise.  
172  Case IV/M.726 – Bosch/Allied Signal, paragraph 22.  
173  Form CO, paragraph 1.194.  
 
33 spring and suspension. Typically, dampers are oil, hydraulic liquid o r gas -filled 
piston cylinders which act to curb unnecessary vibrations in the suspension by 
absorbing force through the resistance that occurs when the oil or hydraulic liquid 
passes through fine holes that penetrate the piston inside the damper (the force  that 
occurs due to this resistance is called ‘damping force’). As such, dampers absorb the 
vibrations and impacts transmitted from the road to the wheels, in order to ensure the 
wheels maintain contact with the road surface, and that the vehicle does not move 
excessively.174 
4.3.10.1. Product market  
(A) The Commission’s decisional practice 
(148)  The Commission has previously looked at the market for all shock absorbers, 
considering that it constitutes a separate product market. The Commission left open 
(a) whether a distinctio n could be drawn between different types of shock absorber, 
namely: assembled suspension struts, shock absorbers (i.e., dampers) and suspension 
springs (i.e., coil springs) and (b) whether shock absorbers may form part of larger 
modules such as corner modules or complete axles.175  
(B) The Notifying Parties’ view  
(149)  The Notifying Parties agree that there is likely a distinction between conventional 
and electronically -controlled dampers as the latter is typically much more 
sophisticated and costly.176 However, there is  supply side substitutability as it is 
possible for manufacturers to switch their production without incurring significant 
costs.177 
(150)  The Notifying Parties  further  consider that front forks with conventional damping 
shock absorbers, front forks with active da mping shock absorbers, shock absorbers 
with conventional damping, rear shock with active damping shock absorbers and 
steering dampers form part of a n overall  product market for shock absorbers.178 In 
addition, with regard to front forks and rear cushions, al though common 
technologies are used, switching production would require a certain amount of time 
and investment. Nevertheless, in most cases, motorcycle manufacturers purchase 
front forks and rear cushions as a set from a single supplier, and the competiti on 
status is similar in terms of market share and competitors.179 
(151)  In view of the time and expenses for manufacturers to switch manufacturing lines for 
shock absorbers for use in passenger cars to those for use in motorcycles (or vice 
                                                 
174  Form CO, paragraph 1.114.  
175 Case COMP/M.7420 –  ZF / TRW, paragraphs 22 to 24. See also Case COMP/M.1959 – Meritor / Arvin, 
paragraphs 9 -10. As explain in footnote 15 of the case, “shock absorbers are typically oil, hydraulic fluid 
or gas -filled piston cylinders which act to dampen  the vibrations of the heavy -duty suspension springs 
which absorb the vibrations and impacts transmitted from the road to the wheels, in order to ensure the 
wheels maintain contact with the road surface, and that the vehicle does not move excessively.”  
176  Form CO, paragraph 1.115. In any case, no affected market arises from the Parties’ activities in these two 
types of dampers. Reply to question 10 of RFI 1.  
177  Reply to RFI 14, Annex 1.  
178  Reply to RFI 14, Annex 1.  
179  Reply to RFI 9.  
 
34 versa), the Parties do n ot consider that there is supply side substitutability between 
the supply of shock absorbers  to motorcycles and passenger cars.180  
(152)  As outlined in paragraph (35) , the Notifying Parties consider that a sub- segmentat ion 
between shock absorbers for small and large motorcycles is not justified.  
(C) The Commission’s assessment  
(153)  The Commission notes that the precedent which analysed shock absorbers related to 
these components for heavy duty vehicles and that for motorcycles, additional  
categories appear to be relevant.  
(154)  In the market investigation, one respondent mentioned the following variations of 
shock absorbers, as “ these products are not substitutable by the customer due to 
different design and functionality ”:181 
- Front for k with conventional damping182 
- Front fork with active damping183 
- Shock absorber with conventional damping184 
- Rear shock with active damping185 
- Steering damper186  
(155)  Moreover, a majority of respondents in the market investigation confirmed that there 
is no demand- side substitutability, neither between shock absorbers for passenger 
cars and for motorcycles, nor between small and large motorcycles.187  
(156)  However, the market investigation , contrary to the statement of the Parties,  pointed 
to supply- side substitutability as a m ajority of respondents  replied that the same 
suppliers produce all types of shock absorbers , both for passenger cars and for 
motorcycles.188 Competitors explained that “ With respect to some types of shock 
                                                 
180  Reply to RFI 7, Tab le 11.  
181  Non-confidential reply to question 6 of questionnaire to competitors.  
182  A front fork with conventional damping shock absorbers is a damper equipped at the front wheel of a 
motorcycle that mechanically generates damping force through the piston i nside the damper moving when 
the suspension goes up and down. (Reply to RFI 14, Annex 1).  
183  A front fork with active damping shock absorbers is a damper equipped at the front wheel of a motorcycle 
that controls the damping force of front fork electronical ly. (Reply to RFI 14, Annex 1).  
184  Conventional dampers mechanically generate damping force through the piston inside the damper moving 
when the suspension goes up and down.  
185  A rear shock with active damping is a damper equipped at the rear wheel of a mo torcycle that controls the 
damping force of the rear cushion electronically. (Reply to RFI 14, Annex 1).  
186  Steering dampers are used to dampen vibrations and unstable motions in the steering of motorcycles, and 
are installed mostly on racing motorcycles and off -road motorcycles. Steering dampers are not mass -
produced parts, but are manufactured in response to customer requests, with [Number of steering dampers 
sold by Showa]  units sold by Showa in 2019. Switching production lines with shock absorbers for 
motorcycles (front forks and rear cushion) requires a certain amount of time and investment. ( Reply to 
RFI 9, Annex 1).  
187  Replies to question 2 of questionnaire to customers and to question 2 of questionnaire to competitors.  
188  Replies to question 3 and 6  of questionnaire to customers and replies to question 3 and 6 of questionnaire 
to competitors.  
 
35 absorbers, the technology used in passenger car and m otorcycle applications may be 
similar, but the products will not be the same in terms of price, performance 
characteristics or intended use ” and “Technical and functional characteristics of 
Shock Absorbers are the same, but the structure is different and not 
interchangeable .”189 
(157)  In any event, for the purpose of the present decision, the exact product market 
definition can ultimately be left open190 as the proposed transaction does not raise 
serious doubts as to its compatibility with the internal market under a ny plausible 
market definition.  
4.3.10.2. Geographic market  
(A) The Commission’s decisional practice 
(158)  In relation to the supply of shock absorbers, the Commission has considered (but 
ultimately left open) that the geographic market for supply of these products may be 
EEA-wide in scope, if not worldwide.191  
(B) The Notifying Parties’ view  
(159)  The Notifying Parties submit that the appropriate geographic market for shock 
absorbers is worldwide: transport costs are low, there are no specific trade barriers 
and these products are traded globally. For example, Showa does not manufacture 
component parts for anti -vibration systems in the EEA and all its sales are achieved 
through imports. HIAMS manufactures shock absorbers within the EEA for sale in 
the EEA.192 
(C) The Commission’s assessment  
(160)  In line with its decisional practice and the findings of the market investigation 
outlined in paragraph (45), for the purposes of this Decision it can be left open 
whether the geographic market is defined as EEA -wide or worldwide, as the 
proposed transaction does not raise any serious doubts as to its compatibility with 
the internal market under any plausible market definition adopted.  
4.3.11. Other motorcycle components  
(161)  The Transaction also gives rise to vertically affected markets in relation to the  
following motorcycle components (not used in passenger cars) . Nevertheless , in 
those motorcycle component markets, the Parties’ combined market share remains 
                                                 
189  Non-confidential replies to question 2.1 of questionnaire to competitors.  
190  Between shock absorbers (i) for small and large motorcycles separately or combi ned and (ii) for 
passengers cars and motorcycles separately or combined, (iii) the different types mentioned or an overall 
market. For the different types of shock absorbers, the Notifying Parties have confirmed that the 
Integrated Company’s market share i n any of these product sub- segmentations do not materially differ 
from the market shares of the Integrated Company in the market for shock absorbers as a whole (Reply to 
question 1 of RFI 9). As for the distinction between (i) large and small motorcycles a nd (ii) motorcycles 
and passenger car component, the competitive analysis focuses on the market definitions under which 
affected markets would arise.  
191  COMP/M.7420 – ZF / TRW, paragraphs 44 to 50 (all shock absorbers); Case COMP/M.1959 – Meritor / 
Arvin,  paragraph 11. In Case COMP/M.6339 – Freudenberg & Co / Trelleborg / JV, (paragraphs 23 -25). 
192  Form CO, paragraph 1.203.  
 
36 below 20%193 and no competition concerns arise in  any of these produc t markets, as 
also confirmed by the market investigation.  
(162)  A handle lever bracket  is an aluminium clamp for securing the handlebars of a 
motorcycle to the body.194  
(163)  A panel brake  is a drum brake for motorcycles (i.e. a brake system in which a 
friction material is pressed from inside the drum to generate braking force).195A CBS  
is a system combining the front and rear brakes of a motorcycle whereby the rider's 
braking action of depressing one of the levers is applied to both the front and rear 
brakes.196 
(164)  A speed m eter gear is attached to the wheel accelerator of a motorcycle to measure 
speed by detecting the rotation speed of the wheel.197 
(165)  Drivetrain systems are power transmission devices. They play a role in transferring 
to the rear wheel the rotational force genera ted by the engine and the acceleration 
and deceleration adjustments in revolutions per minute (RPM). Motorcycles use 
either a chain, a belt or a shaft drive to transmit power from the engine to the wheels. 
The driving force generated by an engine is transm itted through the side gear (bevel 
gear), the drive shaft and the final gear (bevel gear). These gears play an important 
role with regard to changes in the rotational force generated by the engine and the 
acceleration and deceleration adjustments in RPM. T he side gear assembly turns the 
force  of the output shaft of the engine  by 90°, and transmits the power to the final 
gear assembly through a drive shaft. The final gear assembly transfers the power of 
the engine into the rotation of the rear wheel. 198 
4.3.11.1. Product  market  
(A) The Commission’s decisional practice  
(166)  The Commission has not previously analysed any of the motorcycle components  
identified above . However, the Commission has in past cases identified different 
markets f or each different automotive component . 199 
(B) The Notifying Parties’ view  
(167)  The Parties submit that none of the markets mentioned above (handle lever brackets, 
panel brakes, CBS, speed meter gears and drivetrain systems (shaft drive)) should be 
further sub- segmented .200  
                                                 
193  Below [20 -30]% in case of drivetrain systems (shaft drive). As only Showa is active in this market, no 
horizontally affected market  arises. (Form CO, table 20.)  
194  Form CO, paragraph 1.131.  
195  Form CO, paragraph 1.107.  
196  Form CO, paragraph 1.349.  
197  Form CO, paragraph 1.415.  
198  Form CO, paragraph 1.404 et seq. The Parties submit that they (Showa) are only active in shaft drives.  
199  See Case  IV/M. 726 - Bosch/Allied Signal, para. 9 seq.  
200  Form CO, table 16.  
 
37 (C) The Commission’s assessment  
(168)  The Co mmission considers that based on its practice to distinguish between each 
distinct automotive component, the relevant product markets for the purpose of the 
present decision are the markets for the supply of handle lever bracket s, panel 
brakes , speed meter  gears, CBS, and shaft drive drivetrain systems. The market 
investigation did not raise concerns or potential sub- segmentations for these markets.  
(169)  In any event, the  precise product market definition for these components can be left 
open201, as the  proposed transaction  does not raise serious doubts as to its 
compatibility with the internal market for any of these products .  
4.3.11.2. Geographic market  
(A) The Commission’s decisional practice  
(170)  The Commission has not previously analysed the market for the supply of  any 
motor cycle components . In recent cases in which the Commission analysed the 
markets for supply of automotive components parts, the Commission considered (but 
left open) that the geographic market may be EEA -wide  in scope, if not 
worldwide.202 
(B) The Notifying Partie s’ view  
(171)  The Notifying Parties submit that the appropriate geographic market for the supply 
of automotive and motorcycle components is worldwide. Transport costs are low: in 
many cases, the Notifying Parties estimate that transport costs per unit amount to 
[Percentage of the price of the component comprised of transport costs] % of the 
price of the component. In addition, there are no specific trade barriers and these 
products are traded globally.203 
(C) The Commission’s assessment  
(172)  In line with its decisional pract ice and  the findings of the market investigation 
outlined in paragraph (37), for the purposes of this Decision the Commission 
considers that the geographic market for these products can be left open between 
EEA -wide and worldwide.  
4.3.12. Passenger cars  
4.3.12.1. Product market  
(A) The Commission’s decisional practice 
(173)  In previous cases where the Commission assessed automotive market s, it left open 
whether the product market  include s all passenger cars or should be segmented by 
type of passenger car (into (i) mini cars, (ii) s mall cars, (iii) medium cars (iv) large 
                                                 
201  Between components for small and large motorcycles separately or combined. The competitive analysis 
focuses on the market definitions under which affected markets would arise.  
202  See e.g. Case COMP M.7174 – Federal -Mogul Corporation / Honeywell Friction Materials, paragraphs 18 
to 23; Case COMP/M.4878 - Continental / Siemens VDO paragraphs 50 -51. 
203  Form CO, paragraph 1.194.  
 
38 cars, (v) executive cars, (vi) luxury cars (vii) sport cars, (viii) sport utility vehicles 
("SUVs") and (ix) multipurpose vehicles).204 The Commission has previously 
considered the further sub- segmentation of the S UV s egment into (i) small, 
(ii) medium and (iii) large SUVs but left this question open.205 
(174)  In Peugeot/Opel, the Commission investigated whether electric cars constitute a 
separate product market and whether this possible market should be further 
segmented accor ding to (i) technology (electric batter y cars and hybrid cars) or 
(ii) the categories defined for vehicles with combustion engines.206 
(B) The Notifying Parties’ view  
(175)  The Notifying Parties agree that the relevant downstream market should be the 
market for passen ger cars, but submit that it is not necessary to conclude on market 
definition, as market shares in any potential upstream and downstream markets are 
not indicative of foreclosure concerns .207  
(C) The Commission’s assessment  
(176)   Therefore , the Commission will reta in the product market definition provided in its 
past decisional practice as described in paragraph (173) . 
4.3.12.2. Geographic market  
(A) The Commission’s decisional practice 
(177)  In previous decisions the Commission has ultimate ly left open whether the 
geographic scope of the markets for manufacturing and supply of passenger cars and 
LCVs is EEA- wide or national in scope.208  
(B) The Notifying Parties’ view  
(178)  The Notifying Parties submit that the downstream market for passenger cars is at 
least EEA -wide , as manufacturers of passenger cars source automotive components 
on a global basis (indeed, Honda sources from each of HIAMS, Keihin and Nissin 
Kogyo from outside the EEA) .209  
(C) The Commission’s assessment  
(179)  The Commission will retain the geogr aphic market definition provided in its past 
decisional practice as described in paragraph (173)  
                                                 
204  Case COMP/M.8449 – Peugeot/Opel, paragraph 11.  
205  Case COMP/M.8449 – Peugeot/Opel, paragraph 12.  
206  Case COMP/M.8449 – Peugeot/Opel, paragraph 14.  
207  Form CO, paragraph 1.217.  
208  Case COMP/M.8449 – Peugeot/Opel, paragraph 26.  
209  Form CO, paragraph 1.216.  
 
39 4.3.13. Motorcycles  
4.3.13.1. Product market  
(A) The Commission’s decisional practice 
(180)  The Commission in a previous  case considered that  the market for the production 
and supply of motorcycles should be segmented on the basis of engine size.210 
Thereby, the Commission did not make a distinction between small and large 
motorcycles, but only between scooters and motorcycles , ultimately leaving  the 
market definition open.211  
(B) The Notifying Parties’ view  
(181)  The Notifying Parties submit that the appropriate frame of reference in this case is 
for the production of all motorcycles , in line with the Commission’s previous 
practice.  The Notifying Parties su bmit that a segmentation between downstream 
markets for components for small (engine size below 250cc) and for large (engine 
size above 250cc) motorcycles, is not justified, given supply- side substitutability.  
(C) The Commission’s assessment  
(182)  The Commission ag rees that the appropriate frame of reference in this case is for the 
production of all motorcycles, which is in line with Piaggio/Aprilia. The 
Commission will retain the product market definition provided in its past decisional 
practice as described in par agraph (173)  as the proposed transaction does not raise 
serious doubts as to its compatibility with the internal market for any of these 
products.   
4.3.13.2. Geographic market  
(A) The Commission’s decisional practice 
(183)  In Piag gio/Aprilia , the Commission found that the market for motorcycles was  
national in scope .212 
(B) The Notifying Parties’ view  
(184)  For motorcycles, the Notifying Parties submit that the appropriate geographic market  
is at least EEA -wide , as manufacturers of motorcycles typically source automotive 
components on a global basis ( in particular,  Honda sources and the Targets supply 
their products at a worldwide level).213  
                                                 
210  Case COMP/M.3570 – Piaggio / Aprilia.  
211 Case C OMP/M.3570 – Piaggio / Aprilia, paragraph 21. The Commission considered a potential 
segmentation between the sale of scooters (engine size below 50cc) and motorcycles (engine size 
above  50cc).  
212  Case COMP/M.3570 – Piaggio / Aprilia , paragraph 23 . 
213  Form CO, paragraph 1.219.  
 
40 (C) The Commission’s assessment  
(185)  The production of motorcycles for sale in the EEA Member States takes place i n an 
area which is at least EEA -wide, as the Parties confirmed: based on 2019 sales data, 
[Share of motorcycles sold by Honda in the EEA that were produced in the EEA] % 
of the motorcycles Honda sold in the EEA were produced in the EEA (in production 
plants  in Spain and Italy, for sale in the entire EEA market), suggesting markets are 
at least EEA -wide. Following this reasoning, the market for production of 
motorcycles should be at least EEA -wide.  
(186)  In any event, for the purpose of this decision, the exact geographic market definition 
can ultimately be left open between national, EEA -wide and worldwide .214  
4.4. Horizontal effects  
4.4.1. Analytical framework  
(187)  Article 2 of the Merger Regulation requires the Commission to examine whether 
notified concentrations are compatible with the internal market, by assessing whether 
they would significantly impede effective competition in the internal market or in a 
substantial part of it, in particular through the creation or strengthening of a 
dominant position.  
(188)  The Commission Guidelines on the assessment of horizontal mergers under the 
Merger Regulation (the "Horizontal Merger Guidelines") distinguish between two 
main ways in which mergers between actual or potential competitors on the same 
relevant market may significantly impede effe ctive competition, namely non-
coordinated effects and coordinated effects.  
(189)  Non-coordinated effects may significantly impede effective competition by 
eliminating the competitive constraint imposed by each merging party on the other, 
as a result of which th e Integrated Company  would have increased market power 
without resorting to coordinated behaviour. The Horizontal Merger Guidelines list a 
number of factors215 which may influence whether or not significant non -coordinated 
effects are likely to result from a merger, such as the large market shares of the 
merging firms, the fact that the merging firms are close competitors, the limited 
possibilities for customers to switch suppliers, or the fact that the merger would 
eliminate an important competitive force. N ot all of these factors need to be present 
for significant non- coordinated effects to be likely. The list of factors, any one of 
which is not necessarily decisive, is also not an exhaustive list.   
4.4.2. Integrated Company  Summary of horizontally affected market s 
(190)  In the EEA  alone , the transaction does not give rise to horizontally affected 
markets.216  
                                                 
214  Honda confirmed that its market share at national level (for an overall market for all motorcycles and 
small and large motorcycles separately) would not substantially differ from its market shares at the EEA 
level. Therefore national markets will not be discussed in this Decision. (Reply to RFI 20).  
215  Horizontal Merger Guidelines, paras 24 et seqq.  
216  Form CO, section 6.5.  

 
42 of (i) the strong supply relationships of HIAMS and Nissin Kogyo with Honda , and 
(ii) the  supply- side substitutability of brake master cylinders for use in motorcycles 
and for use in passenger cars.221  
(194)  According to the Notifying Parties, c ompetitors have the ability to increase capacity 
to respond to any increase in customer demand. Brake master cylinders for 
motorcycles are undifferentiated products. HIAMS and Nissin Kogyo cannot be 
considered pa rticularly close competitors, n or can HIAMS be characterised as an 
important competitive force that has more influence on the competitive process than 
its market share suggests (to the contrary, as most of its sales of this component are 
accounted for by Honda ). Customers of brake master cylinders for motorcycles are 
large OEMs that exercise considerable countervailing buyer power in commercial 
negotiations due to their size and commercial significance to the Parties (many of 
whom also purchase other component parts from the Parties).222   
(195)  Finally, the Notifying Parties submit that the transaction will have no impact on 
existing conditions of competition within the EEA, in view of the fact that HIAMS 
has no sales of brake master cylinders within the EEA.223  
(B) The Com mission’s assessment  
(196)  Although some of the customers of motorcycle components responding to the 
Commission’s market investigation expressed concerns about the possibility to 
source brake master cylinders from other companies than the Targets, others 
conside red that they would have alternative suppliers.224 The Commission considers 
that the  transaction seems unlikely to result in a significant impediment to effective 
competition in the market for the supply of brake master cylinders for use in 
motorcycles  for t he reasons outlined below .  
(197)  First, the results of the market investigation show that competitors have spare 
capacity to increase production of brake master cy linders for use in motorcycles  
should the Integrated Company increase prices post -transaction, all owing customers 
to switch to competing suppliers .225 Competitors in this market are large 
international suppliers (including Brembo, Akebono, Hubei, Hengtong and 
Endurance) [Parties’ views of other suppliers] ,226 while customers of brake master 
cylinders for m otorcycles are large OEMs that exercise considerable countervailing 
buyer power in commercial negotiations due to their size and commercial 
significance to the Parties (many of whom also purchase other component parts from 
the Parties).  227  Furthermore, bra ke master cylinders are just one component among 
the many parts comprising a motorcycle  and account for a very small portion 
([Percentage of the cost of a motorcycle comprised of the relevant component ]%)228 
of the total cost of the motorcycle ; therefore, an  increase in the price of brake master 
cylinders would have no material impact on the prices of motorcycles, rendering any 
                                                 
221  Reply to question 1 of RFI 8.  
222  Reply to question 1 of RFI 8.  
223  Form CO, paragraph 1.450.  
224  Reply to question 12 of questionnaire to customers.  
225  Replies to question 13 of questionnaire to competitors.  
226  Reply to question 2 of RFI 14.  
227  Reply to question 1 of RFI 8.  
228  Reply to question 1 of RFI 11.  
 
43 kind of foreclosure strategy attempted ineffective. Also, because the market for 
automotive components is characterised by multi -mark et contacts, in case of 
foreclosure for one product, OEMs could retaliate by switching away from the 
Integrated Company for other products.  
(198)  Second, suppliers can switch between manufacturing brake master cylinders for use 
in passenger cars and motorcycles  without particular difficulty. The Notifying 
Parties estimate that any switch would require [Parties’ estimate of switching costs] . 
As such, the Notifying Parties consider that there is supply -side substitutability 
between brake master cylinders for use i n motorcycles and passenger cars,229 which 
was confirmed by the majority of respondents to the Commission’s market 
investigati on, which points at low barriers to entry in this market.230 The combined 
market share of the Integrated Company in the market encompa ssing the supply of  
brake master cylinders  for use in both passenger cars and motorcycles is below 20% 
at EEA and worldwide level.231 Therefore, and especially in view of the supply side 
substitutability of brake master cylinders for use in passenger cars an d motorcycles, 
the Commission considers that the market shares of the Integrated Company in the 
market for the supply of brake master cylinders for use in motorcycles overstate the 
competitive impact of the transaction.  
(199)  Third, prior to the transaction, Honda accounts for [Percentage of Nissin’s sales of 
brake master cylinders for which Honda accounts] % of Nissin’s sales of brake 
master cylinders for use in motorcycles worldwide.232 Furthermore, [Details of 
HIAMS’ sales of brake master cylinders]  HIAMS’ sales of brake master cylinders 
for use in motorcycles are to Honda (accounting for [Percentage of HIAMS’ sales of 
brake master cylinders for which Honda accounts] % of its total sales), with [Details 
of HIAMS’ customer base]  being HIAMS’ only other main customer  (accounting for 
[Percentage of HIAMS’ sales of brake master cylinders] % of its total sales).233 As 
such, HIAMS’ and Nissin’s market share overstates the competitive impact of the 
transaction on this market and, overall, the part of the market for which the 
Integrated Company will compete is smaller than its market share reflects, because 
already prior to the transaction most if its sales are accounted for by its future 
parents , while a number of large international players such as (Brembo and 
Akebono) remain  to continue supplying other OEMs .234  
(200)  In view of the above, the Commission concludes that the  transaction does not raise 
serious doubts as to its compatibility with the internal market and the functioning of 
the EEA Agreement with respect to the market  for brake master cylinders for use in 
motorcycles  from the point of view of non- coordinated effects.  
                                                 
229  Reply to question 3(a) of RFI 7. The Notifying Parties confirm that they do not consider [Parti es’ estimate 
of switching costs and duration]  to be substantial considering the Parties’ corporate size and total revenue 
(approximately JPY […] billion for HIAMS). Further, switching is made easier by the fact that both brake 
master cylinders and floating  calipers and brake pads (assembled) can thereafter be used on a continuous 
basis (Reply to question 3 of RFI 14).  
230  Replies to question 3 of questionnaire to competitors and replies to question 3 of questionnaire to 
customers.  
231  Reply to question 1 of R FI 8.  
232  Reply to question 1 of RFI 2.  
233  Reply to question 1 of RFI 8.  
234  Possible input and customer foreclosure effects will be addressed in Section 4.5.  

 
45 floating caliper s and brake pads (assembled)  for use in motorcycles are large OEMs 
that exercise considerable countervailing buyer power in commercial negotiations 
due to their size and commercial significance to the Parties (many of whom also 
purchase other component parts from the Parties).239   
(204)  Finally, the Notifying Parties submit that the transaction will have no impact on 
existing conditions of competition within the EEA, in view of the fact that HIAMS 
has no sales of floating caliper s and brake pads (assembled) for use in motorcycles 
within the EEA. 240 
(B) The Commission’s assessment  
(205)  Although some of the customers of motorcycle components responding to the 
Commission’s market investigation expressed concerns about the possibility to 
source floating caliper s and brake pads (assembled) from other compan ies than the 
Targets, others considered that they would have alternative suppliers.241 The 
Commission considers that t he transaction seems unlikely to result in a significant 
impediment to effective competition in the market for the supply of floating caliper s 
and brake pads (assembled) for use in motorcycles  for the reasons stated below . 
(206)  First, the results of the market investigation show that competitors have spare 
capacity to increase production of floating caliper s and brake pads (assembled) for 
use in motorcycles should the Integrated Company increase prices allowing 
customers to switch to competing suppliers .242 Competitors in this market are large 
international suppliers (including Brembo, Akebondo, Hubei, Hengtong and 
Endurance),243 while customers of floating caliper s and brake pads (assembled) for 
use in motorcycles are large OEMs that exercise considerable countervailing buyer 
power in commercial negotiations due to their size and commercial significance to 
the Parties (many of whom also purchase other component parts from the Parties).244 
Furthermore, floating calipers and brake pads (assembled) are just one component 
among the many parts comprising a motorcycle and account for a very small portion 
([Percentage of the cost of a motorcycle comprised of the relevant component ]%)245 
of the total cost of the motorcycle; therefore, an increase in the price of floating 
calipers and brake pads (assembled) would have no material impact on the prices of 
motorcycles, rendering any kind of foreclosure strategy attempted ineffective. Also, 
because the market for automotive components is characterised by multi -market 
contacts, in case of foreclosure for one product, OEMs could retaliate by switching 
away from the Integrated Company for other products.  
(207)  Second, suppliers can switch between manufacturing floating caliper s and brake 
pads (assembled) for use in passenger cars and in motorcycles without particular 
difficulty. The Notifying Parties estimate that any switch would require [Parties’ 
estimate of switching costs and du ration] . As such, the Notifying Parties consider 
that there is supply -side substitutability between floating caliper s and brake pads 
                                                 
239  Reply to question 1 of RFI 8.  
240  Reply to question 1 of RFI 8 and Form CO, paragraph 1.252.  
241  Reply to question 12 of questionnaire to customers.  
242  Replies to question 13 of questionnaire to competitors.  
243  Reply to question 2 of RFI 14.  
244  Reply to question 1 of RFI 8.  
245  Reply to question 1 of RFI 11.  
 
46 (assembled) for use in motorcycles and passenger cars,246 which was confirmed by 
the majority of respondents to the Commissio n’s market investigation , which points 
at low barriers to entry in this market.247 The combined market share of the 
Integrated Company in the market encompassing the supply of floating caliper s and 
brake pads (assembled) for use both in passenger cars and mo torcycles is below 20% 
at EEA and worldwide level.248 Therefore, and especially in view of the supply side 
substitutability of floating caliper s and brake pads (assembled) for use in passenger 
cars and motorcycles, the Commission considers that the market sh ares of the 
Integrated Company in the market for the supply of brake master cylinders for use in 
motorcycles overstate the competitive impact of the transaction.  
(208)  Third, prior to the transaction, Honda already accounts for [ Percentage of Nissin 
Kogyo’s sales of the relevant component for which Honda accounts ]% of Nissin 
Kogyo’s sales of floating caliper s and brake pads (assembled) for use in 
motorcycles. Furthermore, [Percentage of H IAMS’ sales of the relevant component 
for which Honda accounts ]% of HIAMS’ s ales of floating caliper s and brake pads 
(as an assembled product) for use in motorcycles on a worldwide basis is represented 
by purchases by Honda249. Therefore, the part of the market for which the Integrated 
Company will compete is smaller than its market  share reflects as, already prior to 
the transaction, a large part if its sales are accounted for by two of its future 
parents.250  
(209)  In view of the above, the Commission concludes that , the transaction does not raise 
serious doubts as to its compatibility with the internal market and the functioning of 
the EEA Agreement in relation to the market for floating caliper s and brake pads 
(assembled) for use in motorcycles due to  non- coordinated effects.  
4.5. Vertical effects  
4.5.1. Analytical framework  
(210)  As regards non- horizontal  effects, the Commission Guidelines on the assessment of 
non-horizontal mergers,251 (“Non -Horizontal Merger Guidelines”) distinguish 
between two broad types of concentrations that concern undertakings which are 
active on different relevant markets (“non -horizontal mergers”), namely vertical 
mergers and conglomerate mergers.   
                                                 
246  Reply to question 3(a) of RFI 7 and Reply to question 3 of RFI 14. The Notifying Parties confirm that 
they do not consider an additional investment of [Parties’ estimate of switching costs and duration]  to be 
substantial considering the Parties’ corporate size and total revenue (approximately JPY […] billion for 
HIAMS). Further, switching is made  easier by the fact that both brake master cylinders and floating 
calipers and brake pads (assembled) can thereafter be used on a continuous basis.  
247  Replies to question 3 of questionnaire to competitors and replies to question 3 of questionnaire to 
custo mers.  
248  Reply to question 1 of RFI 8.  
249  Reply to question 2 of RFI 14.  
250  Possible input and customer foreclosure effects will be addressed in Section 4.5.  
251  Guidelines on the assessment of non -horizontal mergers under the Council Regulation on the cont rol of 
concentrations between undertakings (OJ C 265, 18.10.2008, p. 6) (“Non -horizontal Merger Guidelines”).  
 
47 (211)  A vertical merger may result in anti- competitive effects due to foreclosure. 
Foreclosure concerns a situation where actual or potential rivals’ access to supplies 
or markets is hampered or eliminated as a result of the vertical merger, thereby 
reducing these companies’ ability and/or incentive to compete.252   
(212)  Two forms of foreclosure can be distinguished in a vertical relationship: input and 
customer foreclosure.   
(213)  Input foreclosure arises  where, post -transaction, the new entity would be likely to 
restrict access to the products or services that it would have otherwise supplied 
absent the vertical merger, thereby raising its downstream rivals’ costs by making it 
harder for them to obtain supplies of the input under similar prices and conditions as 
absent the vertical merger.253   
(214)  Customer foreclosure may occur when a supplier integrates with an important 
customer in the downstream market. Because of this downstream presence, the 
Integrated Com pany may foreclose access to a sufficient customer base to its actual 
or potential rivals in the upstream market (the input market) and reduce their ability 
or incentive to compete. In turn, this may raise downstream rivals’ costs by making 
it harder for them to obtain supplies of the input under similar prices and conditions 
as absent the vertical merger. 254  
(215)  For an input or customer foreclosure scenario to raise competition concerns, three 
cumulative factors need to be taken into account: (i) the ability o f the Integrated 
Company to engage in foreclosure; (ii) the incentives of the Integrated Company to 
do so; and (iii) whether a foreclosure strategy would have a significant detrimental 
effect on competition in the downstream market.255   
                                                 
252  Non-Horizontal Merger Guidelines, paragraph 29.   
253  Non-Horizontal Merger Guidelines, paragraph 31.   
254  Non-Horizontal Merger Guidelines, par agraph 58.   
255  Non-Horizontal Merger Guidelines, paragraphs 32 and 59.   




 
52 Although Honda is a stronger  player in the sale of motorcycles at worldwide 
level (with a market share of [30 -40]%) its market share is only [10-20]% in 
the EEA.  Therefore, customer foreclosure strategies seem unlikely to 
succeed.  
(c) In 11 out of the 19 vertically affected markets, the Targets’ mar ket share 
upstream is below 30%. These are the following components for use in 
motorcycles: ele ctronic throttle bodies, ABS, brake pads (as a non- assembled 
component), panel brakes, handle lever brackets, CBS, fixed caliper s and 
brake pads (assembled), fixed caliper s (as a non -assembled component),  
floating caliper s (non -assembled) for motorcycles, drivetrain systems (shaft 
drive) , and speed meter gears for motorcycles. For these component  upstream 
markets, input foreclosure strategies seem unlikely to succeed given that an 
affected market results only as a consequence of Honda holding a market 
share above 30% in the downstream market for the worldwide market for the 
supply of motorcycles.  
(d) Only in 7  vertically affected markets for motorcycle components261 the 
market share of the Targets and Honda is above 30% both upstream and 
downstream. However, i n 5 out of these 7 vertically affected markets  
(namely ECUs, fuel pump modules, injectors, brake master cylinders, 
floating caliper s and brake pads (as an assembled product)) , the Integrated 
Company’s  market share would be below 20% EEA and worldwide under 
considerations of supply- side substitutability between  the manufacture of 
those components for use in motorcycles and in passenger cars.262    
(e) For airflow sensors for automobiles, where HIAMS’ worldwide market share 
upstream exceeds 30%, neither Keihin, Showa or Nissin Kogyo supply such 
products not only at EEA level but also at worldwide level .263 
(221)  As regards the ov erall impact that the transaction may have on competition , pre -
existing commercial relationships between the Targets and Honda also leave limited 
room  for input and foreclosure strategies as a result of the merger :  
(a) Input foreclosure concerns arising from the Transaction are likely relatively 
limited because, first , with respect to motorcycle components overall, f or 
each of Keihin, Showa, Nissin Kogyo, and HIAMS, Honda, as a customer, 
accounts for [Percentage of sales accounted for by Honda]%, [Percentage of 
sales accounted for by Honda]%, [Percentage of sales accounted for by 
Honda]% and [Percentage of sales accounted for by Honda]%  of their total 
sales, respectively, at worldwide level.264 Second, with respect to the specific 
motorcycle components giving rise to affected markets, as can be seen from 
the table in paragraph (219)  above, Honda’s purchases of most of those 
components represent the vast majority of the Targets’ sales of those 
components. Moreover, as a result , the Commission considers that, overall, 
                                                 
261  Namely the following components for use in motor cycles: ECUs, carburettors, fuel pump modules, 
injectors, brake master cylinders, floating calipers and brake pads (as an assembled product), and shock 
absorbers.  
262  Reply to question 4 of RFI 7.  
263  Reply to question 6 of RFI 1.  
264  Reply to question 1 of R FI 12. 
 
53 the input foreclosure concerns arising from the Transaction are likely to be 
relatively limited as they  only relate to the sales by the Targets to customers 
other than Honda pre -transaction .  
(b) Customer foreclosure concerns arising from the Transaction are likely 
relatively limited because, f irst, w ith respect to motorcycle components 
overall, Honda has over [Approximate number of suppliers of motorcycle 
component parts to Honda]  suppliers of motorcycle component parts, 
including a large number of motorcycle components which Keihin, Showa, 
Nissin Kogyo and HIAMS do not supply.265 Although the Targets represent 
[Percentage of Honda’s total purchases of motorcycle components] % of 
Honda’s total purchases of motorcycles components ,266 Keihin, Showa, 
Nissin Kogyo and HIAMS are among the most important suppliers of Honda 
(Keihin is [Rank of supplier by volume]  among Honda’s suppliers, Showa is 
[Rank of supplier by volume] , Nissin Kogyo is [Rank of supplier by volume]  
and HIAMS is [Rank of supplier by volume]  in terms of volumes of 
components purchased from an individual supplier ).267 According to the 
Parties, Honda has litt le incentive to source new component parts from the 
Targets, in addition to those parts that are currently sourced from them , 
because of the long development period (typically [Details of development 
period for component parts] ) that is necessary to satisf y the high standards 
required by Honda.  Thus, it would be quite difficult for Honda to source 
components which are not currently supplied by Keihin, Showa, Nissin 
Kogyo and HIAMS, and the possibility of doing so is very low.268 In view of 
this, the Commissi on considers that, overall, customer foreclosure concerns 
for motorcycle components are likely to be relatively limited as a 
consequence of the transaction  
(c) Second, w ith respect to the specific motorcycle components giving 
rise to affected markets, as can be seen from the table in paragraph (219)  
above, Honda purchases the vast majority of its needs for most of those 
components from the Targets  and the transaction will have a limited impact 
on the sale of component parts by other suppliers , which can continue to sell 
component parts to a range of other OEM s. Therefore, the Commission 
considers that the customer foreclosure concerns arising from the Transaction 
are relatively  limited as they only relate to purchases  by Honda from 
suppliers other than the Targets, pre -transaction . 
(222)  In the following paragraphs, the Decision will examine the impact of the transaction 
in each of the vertically affected markets.  
                                                 
265  Reply to question 2 of RFI 13.  
266  Reply to question 1 of RFI 12.  
267  Reply to question 3 RFI 21.  
268  Reply to question 2 of RFI 13.  


 
56 (228)  Second, all manufacturers of airflow sensors responding to the Commission’s market 
investigation stated that they would be able to increase produ ction of this component 
if they received more customer orders.275 
(229)  Third, input foreclosure may raise competition problems only if it concerns an 
important input for the downstream product (for example, when the input concerned 
represents a significant cost f actor relative to the price of the downstream 
product).276 This is not the case for airflow sensors, which represent [ Percentage of 
the price of a passenger car comprised of the relevant component ]% of the total cost 
of manufacturing a passenger cars.277   
(230)  In view of (i) HIAMS’ market share in the supply of airflow sensors for passenger 
cars, (ii) the presence of a number of strong competitors  with spare capacity  and 
(iii) the fact that airflow sensors are just one component among the many parts 
comprising a pa ssenger car, and account for a very small portion ( [Percentage of the 
price of a passenger car comprised of the relevant component ]%) of the total cost of 
the passenger car,  the Commission considers that  the Integrated Company will likely 
not have the abil ity to foreclose access to this input.  
(B.i.b)  No incentives  to foreclose  access to inputs  
(231)  First, Honda’s market share for passenger cars worldwide is low ( [5-10]%), and 
lower than the market share of competitors Volkswagen ( [10-20]%), Toyota ( [10-
20]%), Renault -Nissan -Mitsubishi ( [10-20]%), and Hyundai -Kia ( [5-10]%).278 In the 
EEA, Honda’s market presence is negligible, with a market share [0 -5]%. 
Furthermore, the transaction will not result in any increment of the Notifying 
Parties’ and the Targets’ market share at  the downstream level.  
(232)  Second, a irflow sensors are just one component among the many parts comprising a 
vehicle, and account for a very small portion ( [Percentage of the price of a vehicle  
comprised of the relevant component ]%)279 of the total cost of the ve hicle. 
Therefore, an increase in the price of airflow sensors upstream would have no 
material impact on the downstream prices of vehicles, rendering  any kind of 
foreclosure strategy attempted  ineffective. Furthermore, because the market for 
automotive components is characterised by multi -market contacts, in case of 
foreclosure for one product, OEMs could retaliate by switching away from the 
Integrated Company for other products.  
(233)  In view of the above, the Commission considers that the Integrated Company will 
likely have no incentives to foreclose access to airflow sensors.  
(B.i.c)  Overall likely impact on effective competition  
(234)  In the market investigation, all customers replied that if HIAMS / Keihin / Showa / 
Nissin Kogyo stopped supplying, they could source from other suppliers.280 As a 
                                                 
275  Reply to question 13 of the questionnaire to competitors.  
276  Paragraph 34.  
277  Reply to question 1 of  RFI 11. 
278  Form CO, Table 34.  
279  Reply to question 1 of RFI 11.  
280  Reply to question 12 of questionnaire to customers.  


 
59 motorcycle), during which period suppl iers are committed to supply minimum 
volumes of components at an agreed price.288   
(240)  The Notifying Parties  submit that the Integrated Company will have no incentives to 
engage in input foreclosure in view of the fact that (i) any attempted input 
foreclosure strategy would not be profitable, as it would simply result in the 
customer switching to one of the many alternative suppliers and lost revenues for the 
Integrated Company at the upstream level, with no increase in Honda’s downstream 
revenues in the supply of small motorcycles,  (ii) the proposed transaction will not 
materially change the existing incentives of the Parties to engage in any input 
foreclosure strategy, in view of Honda’s existing economic interest in Keihin (as at 
31 March 2019, Honda owned 41.35% of the voting rights in Keihin) and the fact 
that [ Details of Keihin’s supply to third party customers ].289 
(241)  The Notifying Parties  submit that the Integrated Company  will have no ability or 
incentives to engage in customer foreclosure strategies in view of the fact that 
(i) Honda’s market share at the downstream level in the supply of motorcycles 
(approximately [30-40]%) is limited, (ii) Honda currently purchases [ Share of 
Honda’s demand for ECUs met by the Parties ]% of its total worldwide demand for 
this component from the Parties, (iii) any customer foreclosure strategy would risk 
Honda’s security of supply of the relevant component parts, with no prospects of this 
resulting in increased prices at the upstream or downstream level.290   
(B) The Commission’s assessment  
(B.i) Input foreclosure  
(242)  Although some of the customers of motorcycle components responding to the 
Commission’s market investigation expressed concerns about the possibility to 
source ECUs from other companies than the Targets,  others considered they woul d 
have alternative suppliers.291 The Commission considers that the Integrated 
Company will not have the ability or the incentives to engage in input foreclosure 
strategies, for the reasons stated below.  
(B.i.a)  No a bility to foreclose  access to inputs  
(243)  First,  Keihin ’s market share in the worldwide market for ECUs  for use in small 
motorcycles worldwide is [30-40]% (i.e. only [0 -5] percentage points above the 30% 
threshold) , followed by a number of strong competitors : Bosch with [20-30]% 
market share, as well as Denso  ([10-20]%), Yamaha Electronic  ([10-20]%), 
Mitsubishi ([10-20]%) and Continental ( [10-20]%).292 The transaction will not result 
in any increment of the Notifying Parties’ and the Targets’ market share of this 
component.  
                                                 
288  Reply to question 2 of RFI 14 and reply to question 4 of RFI 15.  
289  Reply to question 2 of RFI 14 and reply to question 4 of RFI 15.  
290  Reply to question 4 RFI 15.  
291  Reply to question 12 of questionnaire to customers.  
292  Form CO, Table 27.  
 
60 (244)  Second, t he majority of the respondents  to the Commission’s market investigation 
confirmed that the same companies usually produce ECUs for both motorcycles and 
for passenger cars.293 In view of considerations of supply- side substitutability, 
should the market comprise the manufacture of ECUs for  use in motorcycles and in 
passenger cars, the Integrated Company’s market share post transaction would be 
[5-10]% at worldwide and EEA level.294 
(245)  Third, input foreclosure may raise competition problems only if it concerns an 
important input for the downstrea m product (for example, when the input concerned 
represents a significant cost factor relative to the price of the downstream 
product).295 This is not the case for ECUs, which represent  [Percentage of the cost 
of a small motorcycle comprised of the relevant  component] % of the total cost of 
manufacturing a small motorcycle.296   
(246)  Fourth, Honda accounted for [Percentage of Keihin’s sales of ECUs for which 
Honda accounted] % of total sales of Keihin’s ECUs for use in small motorcycles 
worldwide. Therefore, prior to the transaction , Keihin Details of Keihin’s supply to 
OEM customers] . Thus, pre -Transaction, the other OEM customers were able to 
source ECUs for small motorcycles from a range of other suppliers, and will be able 
to continue to do so after the transaction. Furthermore, the Commission’s market 
investigation confirmed that all manufacturers of motorcycle components responding 
to the market investigation have spare capacity to increase production,297 making 
input foreclosure unlikely as a consequence of the tr ansaction.  
(247)  In view of the above, the Commission considers that the Integrated Company will 
likely have no ability to foreclose access to ECUs for use in small motorcycles.  
(B.i.b)  No incentives to foreclose access to inputs  
(248)  ECUs are just one component among the ma ny parts comprising a small motorcycle, 
and account for a very small portion ( [Percentage of the cost of a small motorcycle 
comprised of the relevant component] %)298 of the total cost of the motorcycle. 
Therefore, an increase in the price of ECUs upstream wo uld have no material impact 
on the downstream prices of small motorcycles, rendering pointless any kind of 
foreclosure strategy attempted. Furthermore, because the market for motorcycle 
components is characterised by multi -market contacts, in case of foreclosure for one 
product, OEMs could retaliate by switching away from the Integrated Company for 
other products.  
(249)  In view of the above, the Commission considers that the Integrated Company will 
likely have no incentives to foreclose access to ECUs for use in small motorcycles.  
                                                 
293  Reply to question 3 of questionnaire to competitors and reply to question 3 of questionnaire to customers.  
294  Reply to question 4 o f RFI 7.  
295  Paragraph 34.  
296  Reply to question 1 of RFI 11.  
297  Reply to question 13 of questionnaire to competitors.  
298  Reply to question 1 of RFI 11.  
 
61 (B.i.c)  Overall likely impact on effective competition  
(250)  Given that (i) there is a significant number of competitors in the upstream market 
which can supply ECUs for use in small motorcycles , (ii) Honda accounts  for 
[Percentage of Keihin’s sales o f ECUs for small motorcycles accounted for by 
Honda ]% of total sales of Keihin’s ECUs for use in small motorcycles worldwide , 
(iii) the results of the market investigation show that there is spare capacity in the 
market for the manufacture of ECUs fo r use in motorcycles, (iv) ECUs are just one 
component among the many parts comprising a small motorcycle, and account for a 
very small portion ([ Percentage of the cost of a motorcycle comprised of the relevant 
component ]%) of the total cost of the motorcycle , the Commission considers that, 
overall, the Integrated Company would not have the ability or the incentives to 
foreclose access to ECUs for use in small motorcycles.  
(B.ii) Customer foreclosure  
(251)  The majority of  manufacturers of motorcycle components  responding to the 
Commission’s market investigation expressed that they would have sufficient 
alternative customers to supply if Honda were to source all ECUs for motorcycles 
from the Integrated Company.299 Indeed, the Commission considers that the 
Integrated Company will not have the ability or the incentives to engage in customer  
foreclosure strategies related to ECUs for use in small motorcycles, for the reasons 
stated below.  
(B.ii.a) No a bility to foreclose  access to customers  
(252)  First, Honda’s market share for the manufacture of  motorcycles in the EEA is of 
[10-20]%, followed by Piaggio ( [10-20]%), Yamaha ( [10-20]%) and 
BMW  ([5-10]%). W orldwide, Honda’s market share for the manufacture of 
motorcycles is [30-40]%, followed by Hero ( [10-20]%), Yamaha ( [5-10]%), 
Bajaj  ([5-10]%), Suz uki ( [0-5]%) and Kawasaki ( [0-5]%). Concerning small 
motorcycles  Honda’s market share  would be [20 -30]% in the EEA and [30 -40]% 
worldwide .300 In view of Honda’s  relatively  limited market share in the manufacture 
and sale of motorcycles  and the presence of a number of important competitors 
(Hero, Yamaha, Bajaj, Piaggio, BMW) , the Integrated Company is unlikely to have 
the ability to engage in customer foreclosure post -Transaction . 
(253)  Second, Honda purchased [ Share of Honda demand for ECUs for motorcycles met 
by the Targets] % of its needs for ECUs for motorcycles from the Targets. Therefore, 
prior to the transaction, the competitors in the upstream market supplied to the 
remaining OEM manufacturers and will be able to continue to do so after the 
transaction. Indeed, the results of the Commission market investigation showed that 
the majority of manufacturers of motorcycle components responding to the 
questionnaire expects to have sufficient alternative customers to supply if Honda 
were to source all ECUs for motorcycles from the Integrated Company,301 making 
customer foreclosure unlikely as a consequence of the transaction.  
                                                 
299  Reply to question 16 of questionnaire to competitors.  
300  Reply to question 1 of RFI 13.  
301  Reply to question 16 of questionnaire to competitors.  
 
62 (254)  In view of the above, the Commission considers that the Integrated Company will 
likely have no ability to foreclose access to customers for the sale of ECUs for use in 
small motorcycles.  
(B.ii.b)  No incentives to foreclose access to customers 
(255)  ECUs are just one component among the many parts comprising a motorcycle, and 
account for a very small portion ( [Percentage of the cost of a motorcycle comprised 
of the relevant component] %)302 of the total cost of the motorcycle , while the 
Integrated Company’s market share for this component is [Details of Integrated 
Company’s market share]   above 30%. Therefore, any customer foreclosure strategy 
would risk Honda’s securit y of supply of the relevant component part, with no 
prospects of this resulting in increased prices at the upstream or downstream level.  
(256)  In view of the above, the Commission considers that the Integrated Company will 
likely have no incentives to foreclose  access to customers for the sale of ECUs for 
use in small motorcycles.  
(B.ii.c) Overall likely impact on effective competition  
(257)  Given that (i) there is a significant number of players  in the downstream market 
which supply ECUs for use in small motorcycles, (ii) Honda purchased [ Share of 
Honda demand for ECUs for motorcycles met by the Targets ]% of its needs for 
ECUs for motorcycles from the Targets, (iii) the majority of manufacturers of 
motorcycle components responding to the market investigation stated that they 
would have sufficient alternative customers to supply if Honda were to source all 
ECUs for motorcycles from the Integrated Company, (iv) ECUs are just one 
component among the many parts comprising a motorcycle  and account for a very 
small portion ([Percenta ge of the cost of a motorcycle comprised of the relevant 
component] %)303 of the total cost of the motorcycle, the Commission considers that, 
overall, the Integrated Company would not have the ability or the incentives to 
foreclose customer access for the sal e of ECUs for use in small motorcycles.   
(B.iii)  Conclusion on input and customer foreclosure  
(258)  Based on the considerations above, the Commission considers that the transaction 
does not raise serious doubts as to its compatibility with the internal market in 
relatio n to the vertical link between the market for the manufacture and sale of ECUs 
for use in small motorcycles and the market for the manufacture and sale of small 
motorcycles.  
4.5.5. Carburettors  (upstream) for motorcycles (downstream)  
(259)  Keihin supplies carburettors  for use in motorcycles  to Honda at a worldwide level.  
Its worldwide market share for the supply of carburettors for use in motorcycles is 
[40-50]%. However, Keihin does not supply these products in the EEA.304   
                                                 
302  Reply to question 1 of RFI 11.  
303  Reply to question 1 of RFI 11.  
304  Form CO, paragraph 1.435(c).  

 
64 (A) The Notifying Parties’  view  
(261)  The Notifying Parties confirm  that the transaction  will not result in any increment in 
the supply of these products at the upstream level (as the transaction does not give 
rise to a horizontal overlap in the supply of this component part).306 
(262)  The Notifying Parties submit that the Integr ated Company  will have no ability to 
engage in input foreclosure in view of the fact that (i) this component does not 
represent a significant cost factor relative to the price of motorcycles (ii)  [Details of 
the Targets’  sales to Honda]  of the Targets’ sa les of this component are to Honda 
(iii) manufacturers of motorcycles will continue to be able to source this component 
from a range of large international suppliers post- transaction [Parties’ views of other 
suppliers] (iv) the average duration of contract s for the supply of motorcycle 
components is 3- 4 years (linked to the lifespan of the model of motorcycle), during 
which period suppliers are committed to supply minimum volumes of components at 
an agreed price.307    
(263)  The Notifying Parties submit that the In tegrated Company will have no incentives to 
engage in input foreclosure in view of the fact that (i) any attempted input 
foreclosure strategy would not be profitable, as it would simply result in the 
customer switching to one of the many alternative suppli ers and lost revenues for the 
Integrated Company at the upstream level, with no increase in Honda’s downstream 
revenues in the supply of motorcycles, (ii)  the proposed transaction will not 
materially change the existing incentives of the Parties to engage in any input 
foreclosure strategy, in view of Honda’s existing economic interest in Keihin (as at 
31 March 2019, Honda owned 41.35% of the voting rights in Keihin) and the fact 
that Keihin [ Details of Keihin’s supply to third party customers ].308     
(264)  The Notifying Parties consider that the Integrated Company will have no ability or 
incentives to engage in customer foreclosure strategi es in view of the fact that 
(i) Honda’s market share at the downstream level in the supply of motorcycles 
(approximately [30-40]%) is limited, (ii) Honda currently purchases [Share of 
Honda’s demand for the component met by the Parties] % of its total worldwide 
demand for this component from the Parties, (iii)  any customer foreclosure strategy 
would risk Honda’s security of supply of the relevant component parts, with no 
prospects of this resulting in increased prices at the upstream or downstream level.309   
(B) The Commission’s assessment  
(B.i) Input foreclosure  
(265)  The majority of customers of motorcycle components responding to the market 
investigation stated that they would be able to source carburettors from other 
companies than the Targets.310 The Commission considers that the Integrated 
Company will not have the ability or the incentives to engage in input foreclosure 
strategies, for the reasons stated below.  
                                                 
306  Form CO, paragraph 1.470.  
307  Reply to question 2 of RFI 14.  
308  Reply to question 2 of RFI 14.  
309  Reply to question 4 RFI 15.  
310  Reply to question 12 of questionnaire to customers.  
 
65 (B.i.a)  No ability to foreclose access to inputs  
(266)  First, input foreclosure may raise competition problems only if it concerns an 
important input for the downstream product (for example, when the input concerned 
represents a significant cost facto r relative to the price of the downstream product). 
This is not the case for carburettors, which represent  [Percentage of the cost of a 
motorcycle comprised of the relevant component] % of the total cost of 
manufacturing a motorcycle.311   
(267)  Second, although K eihin has a substantial market share in the supply of carburettors 
for small motorcycles ( [40-50]%), prior to the transaction Honda accounted for 
[Share of Keihin’s sales of the relevant component  accounted for by Honda ]% of its 
sales of this component . Therefore, prior to the transaction , Keihin was [Details of 
Keihin’s supply to OEM customers] . Thus, pre -Transaction, the other OEM 
customers were able to source carburettors for small motorcycles from a range of 
other suppliers, and will be able to continue  to do so after the transaction. 
Furthermore, the Commission’s market investigation confirmed that the 
manufacturers of motorcycle components responding to the market investigation 
have spare capacity to increase production of this component,312 and the majority of 
customers of motorcycle components responding stated that they would be able to 
source carburettors from other companies than the Targets,313 making input 
foreclosure unlikely as a consequence of the transaction.  The Parties consider that 
suppliers i n this market (including Mikuni, Ucal, Dellorto, Bing Agency 
International and AMAL) [ Parties’ view of suppliers in the relevant market ].314 
(268)  In view of the above, the Commission considers that the Integrated Company will 
likely have no ability to foreclose a ccess to carburettors  for use in motorcycles.  
(B.i.b)  No incentives to foreclose access to inputs  
(269)  Carburettors are just one component among the many parts comprising a motorcycle, 
and account for a very small portion ( [Percentage of the cost of a motorcycle 
compri sed of the relevant component] %)315 of the total cost of the motorcycle. 
Therefore, an increase in the price of carburettors upstream would have no material 
impact on the downstream prices of motorcycles, rendering pointless any kind of 
foreclosure strategy attempted. Furthermore, because the market for motorcycle 
components is characterised by multi -market contacts, in case of foreclosure for one 
product, OEMs could retaliate by switching away from the Integrated Company for 
other products.  
(270)  In view of the above, the Commission considers that the Integrated Company will 
likely have no incentives to foreclose access to carburettors  for use in motorcycles.  
                                                 
311  Reply to question 1 of RFI 11.  
312  Reply to ques tion 13 of the questionnaire to competitors.  
313  Reply to question 12 of questionnaire to customers.  
314  Reply to question 2 of RFI 14.  
315  Reply to question 1 of RFI 11.  
 
66 (B.i.c)  Overall likely impact on effective competition  
(271)  Given that (i) Honda accounted for [ Share of Targets’ sales of the relevant 
component accounted for by Honda ]% of the sales of the Targets’ carburettors for 
use in motorcycles , (ii) the results of the market investigation show that there is 
spare capacity in the market for the manufacture of carburet tors for use in  
motorcycles, (iii) carburettors are just one component among the many parts 
comprising a motorcycle, and account for a very small portion ( [Percentage of the 
cost of a motorcycle comprised of the relevant component ]%) of the total cost of the 
motorcycle, the Commission considers that, overall, the Integrated Company would 
not have the ability or the incentives to foreclose access to carburettors for use in 
small motorcycles.  
(B.ii) Customer foreclosure  
(272)  The Commission considers that the Integrated Company will no t have the ability or 
the incentives to engage in customer foreclosure strategies related to carburettors for 
use in motorcycles, for the reasons stated below.  
(B.ii.a) No ability to foreclose access to customers  
(273)  First, Honda’s market share for the manufacture of m otorcycles in the EEA is of 
[10-20]%, followed by Piaggio ( [10-20]%), Yamaha ( [10-20]%) and 
BMW  ([5-10]%). Worldwide, Honda’s market share for the manufacture of 
motorcycles is [30 -40]%, followed by Hero ( [10-20]%), Yamaha ( [5-10]%), 
Bajaj  ([5-10]%), Suzuki ( [0-5]%) and Kawasaki ( [0-5]%). The transaction will not 
result in any increment of the Notifying Parties’ and the Targets’ market share for 
the sale of motorcycles, where only Honda is active.  
(274)  Second, Honda purchased [ Share of Honda’s demand for carbure ttors for use in 
motorcycles met by the Targets ]% of its needs for carburettors for use in 
motorcycles from the Targets. Therefore, prior to the transaction, the competitors in 
the upstream market supplied to the remaining OEM manufacturers and will be abl e 
to continue to do so after the transaction, making customer foreclosure unlikely as a 
consequence of the transaction.  
(275)  In view of the above, the Commission considers that the Integrated Company will 
likely have no ability to foreclose access to customers for the sale of carburettors for 
use in motorcycles.  
(B.ii.b)  No incentives to foreclose access to customers 
(276)  First, carburettors are just one component among the many parts comprising a 
motorcycle, and account for a very small portion ( [Percentage of the cost of a 
motorcycle comprised of the relevant component] %)316 of the total cost of the 
motorcycle.  Therefore, the incentives to engage in customer foreclosure are low.  
(277)  In view of the above, the Commission considers that the Integrated Company will 
likely have no incentives to foreclose access to customers for the sale of carburettors 
for use in small motorcycles.  
                                                 
316  Reply to question 1 of RFI 11.  


 
69 continue to be able to source this component from a range of large international 
suppliers pos t-transaction [Parties’ views of other suppliers]  (iv) the average 
duration of contracts for the supply of motorcycle components is 3 -4 years (linked to 
the lifespan of the model of motorcycle), during which period suppliers are 
committed to supply minimum  volumes of components at an agreed price.322   
(283)  The Notifying Parties consider that the Integrated Company will have no incentives 
to engage in input foreclosure in view of the fact that (i) any attempted input 
foreclosure strategy would not be profitable, a s it would simply result in the 
customer switching to one of the many alternative suppliers and lost revenues for the 
Integrated Company at the upstream level, with no increase in Honda’s downstream 
revenues in the supply of motorcycles, (ii) the proposed transaction  will not 
materially change the existing incentives of the Parties to engage in any input 
foreclosure strategy, in view of Honda’s existing economic interest in Keihin (as at 
31 March 2019, Honda owned 41.35% of the voting rights in Keihin) and the fact 
that Keihin already supplies fuel pump modules to Honda.323 
(284)  The Notifying Parties submit that the Integrated Company  will have no ability or 
incentives to engage in customer foreclosure strategi es in view of the fact that 
(i) Honda’s market share at  the downstream level in the supply of motorcycles 
(approximately [30-40]%) is limited, (ii) Honda currently purchases [ Share of 
Honda’s demand for the relevant component met by the Parties ]% of its total 
worldwide demand for this component from the Partie s, (iii)  any customer 
foreclosure strategy would risk Honda’s security of supply of the relevant 
component parts, with no prospects of this resulting in increased prices at the 
upstream or downstream level.324   
(B) The Commission’s assessment  
(B.i) Input foreclosure  
(285)  The majority of customers of motorcycle components responding to the 
Commission’s market investigation stated that they would be able to source fuel 
pump modules  from other companies than the Targets.325 The Commission considers 
that the Integrated Company will not have the ability or the incentives to engage in 
input foreclosure strategies, for the reasons stated below.  
(B.i.a)  No ability to foreclose access to inputs  
(286)  First, Keihin’s market share in the worldwide market for fuel pump modules for use 
in small motorcycles is [30-40]%, followed by M itsuba ( [20-30]%), while there are 
also a number of small competitors active, such as Magneti Marelli, Mitsubishi, 
Delphi and Bosch (each [0 -5]%).326 The transaction will not result in any increment 
of the Notifying Parties’ and the Targets’ market share of this component. 
                                                 
322  Reply to question 2 of RFI 14 and reply to question 4 of RFI 15.  
323  Reply to question 2 of RFI 14 and reply to question 4 of RFI 15.  
324  Reply to question 4 RFI 15.  
325  Reply to question 12 of questionnaire to customers.  
326  Form CO, Table 29.  
 
70 (287)  Second, the majority of the respondents to the Commission’s market investigation 
confirmed that the same companies usually produce fuel pump modules for both 
motorcycles and for passenger cars.327 In view of c onsiderations of supply- side 
substitutability, should the market comprise the manufacture of fuel pump modules 
for use in motorcycles and in passenger cars, the Integrated Company’s market share 
post transaction would be below 20% at worldwide and [ 5-10]% EEA level.328 
(288)  Third, input foreclosure may raise competition problems only if it concerns an 
important input for the downstream product (for example, when the input concerned 
represents a significant cost factor relative to the price of the downstream produc t). 
This is not the case for fuel pump modules, which represent [Percentage of cost of a 
motorcycle comprised of the cost of fuel pump modules] % of the total cost of 
manufacturing a motorcycle.329   
(289)  Fourth, Honda accounted for [ Share of Targets’ sales of the relevant component 
accounted for by Honda ]% of the sales of the Targets’ fuel pump modules for small 
motorcycles. The Commission’s market investigation confirmed that the majority of 
manufacturers of motorcycle components responding have spare capacity to  increase 
production of fuel pump modules for small motorcycles,330 and that the majority of 
customers of motorcycle components responding would be able to source fuel pump 
modules from other companies than the Targets,331 making input foreclosure 
unlikely as a consequence of the transaction.  
(290)  Fifth, the average duration of contracts for the supply of motorcycle components is 
3-4 years (linked to the lifespan of the model of motorcycle),332 during which period 
suppliers are committed to supply minimum volumes of c omponents at an agreed 
price. As such, third party customers of the Targets are also contractually protected 
from input foreclosure for the lifespan of the model of motorcycle that the fuel pump 
modules are being supplied for.333  
(291)  In view of the above, the C ommission considers that the Integrated Company will 
likely have no ability to foreclose access to fuel pump modules for use in small 
motorcycles. 
(B.i.b)  No incentives to foreclose access to inputs  
(292)  Customers are contractually protected from input foreclosure for the lifespan of the 
motorcycle model that the part relates to. Furthermore, f uel pump modules are just 
one component among the many parts comprising a motorcycle, and account for a 
very small portion ([ Percentage of the cost of a motorcycle comprised of th e relevant 
component ]%)334 of the total cost of the motorcycle. Therefore, an increase in the 
price of fuel pump modules upstream would have no material impact on the 
                                                 
327  Reply to question 3 of questionnaire to competitors and reply to question 3 of questionnaire to customers.  
328  Reply to question 4 of RFI 7.  
329  Reply to question 1 of RFI 11.  
330  Reply to question 13 of questionnaire to competitors  
331  Reply to question 12 of questionnaire to customers.  
332  Typically, motorcycles undergo a model change e very three years and suppliers, therefore, tend to supply 
for a minimum of three years per model.  
333  Reply to question 2 of RFI 14 and reply to question 4 of RFI 15.  
334  Reply to question 1 of RFI 11.  
 
71 downstream prices of motorcycles, rendering pointless any kind of foreclosure 
strategy atte mpted. Furthermore, because the market for motorcycle components is 
characterised by multi -market contacts, in case of foreclosure for one product, OEMs 
could retaliate by switching away from the Integrated Company for other products.  
(293)  In view of the above, the Commission considers that the Integrated Company will 
likely have no incentives to foreclose access to fuel pump modules for use in small 
motorcycles. 
(B.i.c)  Overall likely impact on effective competition  
(294)  Given that (i) there is a significant number of compe titors in the upstream market 
which can supply fuel pump modules for use in small motorcycles, in particular in 
view of considerations of supply- side substitutability between the fuel pump 
modules for use in motorcycles and for use in passenger cars, (ii) the results of the 
market investigation show that there is spare capacity in the market for the 
manufacture of fuel pump modules for use in motorcycles, (i ii) fuel pump modules 
are just one component among the many parts comprising a motorcycle, and account 
for a very small portion ([ Percentage of the cost of a motorcycle comprised of the 
relevant component ]%) of the total cost of the motorcycle, the Commission 
considers that, overall, the Integrated Company would not have the ability nor the 
incentives to foreclose access to fuel pump modules for use in small motorcycles.  
(B.ii) Customer foreclosure  
(295)  All manufacturers of motorcycle components responding to the Commission’s 
market investigation stated  that they would have sufficient alternative customers to 
supply if Honda were to source all fuel pump modules for motorcycles from the 
Integrated Company.335 The Commission considers that the Integrated Company will 
not have the ability or the incentives to engage in customer foreclosure strategies for 
the reasons stated  below. 
(B.ii.a) No ability to foreclose access to customers  
(296)  First, Honda’s market share for the manufacture of motorcycles in the EEA is of 
[10-20]%, followed by Piaggio ( [10-20]%), Yamaha ( [10-20]%) and 
BMW  ([5-10]%). Worldwide, Honda’s market share for the manuf acture of 
motorcycles is [30 -40]%, followed by Hero ( [10-20]%), Yamaha ( [5-10]%), 
Bajaj  ([5-10]%), Suzuki ( [0-5]%) and Kawasaki ( [0-5]%). Concerning small 
motorcycles Honda’s market share would be [20 -30]% in the EEA and [30 -40]% 
worldwide .336 The transactio n will not result in any increment of the Notifying 
Parties’ and the Targets’ market share for the sale of motorcycles, where only Honda 
is active.  
(297)  Second, Honda purchased [ Share of Honda’s demand for the relevant component 
met by the Targets ]% of its nee ds for fuel pump modules for small motorcycles from 
the Targets. The majority of manufacturers of motorcycle components responding to 
the Commission’s market investigation stated that they would have sufficient 
alternative customers to supply if Honda were  to source all fuel pump modules for 
                                                 
335  Reply to question 16 of questionnaire to competitors . 
336  Reply to question 1 of RFI 13.  
 
72 small motorcycles from the Integrated Company,337 making customer foreclosure 
unlikely as a consequence of the transaction.   
(298)  In view of the above, the Commission considers that the Integrated Company will 
likely have no ability to foreclose access to customers for the sale of fuel pump 
modules for use in small motorcycles. 
(B.ii.b)  No incentives to foreclose access to customers 
(299)  Fuel pump modules are just one component among the many parts comprising a 
motorcycle, and account for a  very small portion ([ Percentage of the cost of a 
motorcycle comprised of the relevant component ]%)338 of the total cost of the 
motorcycle , while the Integrated Company’s market share for this component is 
[Details of Integrated Company’s market share]  above  30%. Therefore, any 
customer foreclosure strategy would risk Honda’s security of supply of the relevant 
component part, with no prospects of this resulting in increased prices at the 
upstream or downstream level.  
(300)  In view of the above, the Commission consi ders that the Integrated Company will 
likely have no incentives to foreclose access to customers for the sale of fuel pump 
modules for use in motorcycles.  
(B.ii.c) Overall likely impact on effective competition  
(301)  Given that (i) there is a significant number of player s in the downstream market to 
which to supply fuel pump modules, (ii) the results of the market investigation show 
that the majority of competitors would have sufficient alternative customers to 
supply if Honda were to source all fuel pump modules for motorcycles from the 
Integrated Company, (iii) fuel pump modules are just one component among the 
many parts comprising a motorcycle and account for a very small portion 
([Percentage of the cost of a motorcycle comprised of the relevant component ]%) of 
the tot al cost of the motorcycle, the Commission considers that, overall, the 
Integrated Company would not have the ability or the incentives to foreclose 
customer access for the sale of fuel pump for use in small motorcycles.  
(B.iii)  Conclusion on input and customer fo reclosure  
(302)  Based on the considerations above, the Commission considers that the transaction 
does not raise serious doubts as to its compatibility with the internal market in 
relation to the vertical link between the market for the manufacture and sale of fu el 
pump modules  for use in small motorcycles and the market for the manufacture and 
sale of motorcycles.  
                                                 
337  Reply to question 16 of questionnaire to competitors.  
338  Reply to question 1 of RFI 11.  


 
75 would risk Honda’s security of supply of the relevant component parts, with no 
prospects of this resulting in increased prices at the upstream or downstream level.346 
(B) The Commission’s assessment  
(B.i) Input foreclosure  
(308)  The majority of customers of motorcycle components responding to the 
Commission’s market investigation stated that they would be able to source injectors  
from other companies than the Targets .347 The Commission considers that the 
Integrated Company will not have the ability or the incentives to engage in input 
foreclosure stra tegies, for the reasons stated below.  
(B.i.a)  No ability to foreclose access to inputs  
(309)  First, although Keihin  is the strongest player with a  market share in the worldwide 
market for injectors for u se in small motorcycles of [30-40]%, strong international 
companie s are also present in this market, such as Denso ( [5-10]%), Aishin ( [0-5]%), 
Magneti Marelli and Delphi ( [0-5]% each).348 The transaction will not result in any 
increment of the Notifying Parties’ and the Targets’ market share of this component.  
(310)  Second, t he majority of the respondents to the Commission’s market investigation 
confirmed that the same companies usually produce injectors for both motorcycles 
and for passenger cars.349 In view of considerations of supply- side substitutability, 
should the market comprise the manufacture of injectors for use in motorcycles and 
in passenger cars, the Integrated Company’s market share post transaction would be 
below 20% worldwide and [5-10]% on an EEA level .350 
(311)  Third, input foreclosure may raise competition problems only i f it concerns an 
important input for the downstream product (for example, when the input concerned 
represents a significant cost factor relative to the price of the downstream 
product).351 This is not the case for injectors, which represent [ Percentage of th e cost 
of a motorcycle comprised of the relevant component ]% of the total cost of 
manufacturing a motorcycle.352   
(312)  Fourth, Honda accounted for [ Share of the Targets' sales of the relevant component 
accounted for by Honda ]% of the sales of the Targets’ inject ors for use in small 
motorcycles. Therefore, prior to the transaction other OEM customers were able to 
source injectors for use in small motorcycles from a range of other suppliers, and 
will be able to continue to do so after the transaction. Furthermore, the 
Commission’s market investigation confirmed that a majority of manufacturers of 
motorcycle components responding have spare capacity to increase production of 
                                                 
346  Reply to question 4 RFI 15.  
347  Reply to question 12 of questionnaire to customers.  
348  Form CO, Table 30.  
349  Reply to question 3 of questionnaire for competitors and reply to question 3 of questionnaire for 
customers.  
350  Reply to question 4 of RFI 7.  
351  Paragraph 34.  
352  Reply to question 1 of RFI 11.  
 
76 injectors for use in small motorcycles,353 and that a majority of customers of 
motorcycle components responding would be able to source injectors from other 
companies than the Targets,354 making input foreclosure unlikely as a consequence 
of the transaction.  
(313)  Fifth, the average duration of contracts for the supply of motorcycle components is 
3-4 years (linked to the lifespan of the model of motorcycle), during which period 
suppliers are committed to supply minimum volumes of components at an agreed 
price. As such, third party customers of the Targets are also contractually protected 
from input foreclosu re for the lifespan of the model of motorcycle that the injectors 
are being supplied for.355  
(314)  In view of the above, the Commission considers that the Integrated Company will 
likely have no ability to foreclose access to injectors  for use in small motorcycles.  
(B.i.b)  No incentives to foreclose access to inputs  
(315)  Customers are contractually protected from input foreclosure for the lifespan of the 
motorcycle model that the part relates to. Furthermore, injectors are just one 
component among the many parts comprising a motorcycle, and account for a very 
small portion ([ Percentage of the cost of a motorcycle comprised of the relevant 
component ]%)356 of the total cost of the motorcycle. Therefore, an increase in the 
price of injectors upstream would have no material impact on the downstream prices 
of motorcycles, rendering pointless any kind of foreclosure strategy attempted. 
Furthermore, because the market for motorcycle components is characterised by 
multi- market contacts, in case of foreclosure for one product, OEMs could retaliate 
by switching away from the Integrated Company for other products.  
(316)  In view of the above, the Commission considers that the Integrated Company will 
likely have no incentives to foreclose access to injectors  for use in small 
motorcycles. 
(B.i.c)  Overall likel y impact on effective competition  
(317)  Given that (i) there is a significant number of competitors in the upstream market 
which can supply injectors for use in motorcycles, in particular in view of 
considerations of supply- side substitutability between injectors for use in 
motorcycles and for use in passenger cars, (ii) Honda accounts for [Share of Keihin’s 
sales of the relevant component accounted for by Honda ]% of total sales of Keihin’s 
injectors for use in motorcycles worldwide, (iii) the results of the mark et 
investigation show that there is spare capacity in the market for the manufacture of 
injectors  for use in motorcycles, (iv) injectors  are just one component among the 
many parts comprising a motorcycle, and account for a very small portion 
([Percentage of the cost of a motorcycle comprised of the relevant component] %)357 
of the total cost of the motorcycle, the Commission considers that, overall, the 
                                                 
353  Reply to question 13 of questionnair e for Competitors.  
354  Reply to question 12 of questionnaire to customers.  
355  Reply to question 2 of RFI 14 and reply to question 4 of RFI 15.  
356  Reply to question 1 of RFI 11.  
357  Reply to question 1 of RFI 11.  
 
77 Integrated  Company would not have the ability nor the incentives to foreclose access 
to injectors  for use i n motorcycles.  
(B.ii) Customer foreclosure  
(318)  Manufacturers of motorcycle components responding to the Commission’s market 
investigation stated  that they would have sufficient alternative customers to supply if 
Honda were to source all injectors for motorcycles fro m the Integrated Company.358 
The Commission considers that the Integrated Company will not have the ability or 
the incentives to engage in customer foreclosure strategies related to injectors  for use 
in small motorcycles, for the reasons stated below.  
(B.ii.a) No ab ility to foreclose access to customers  
(319)  First, Honda’s market share for the manufacture of motorcycles in the EEA is of 
[10-20]%, followed by Piaggio ( [10-20]%), Yamaha ( [10-20]%) and 
BMW  ([5-10]%). Worldwide, Honda’s market share for the manufacture of 
motorcycles is [30 -40]%, followed by Hero ( [10-20]%), Yamaha ( [5-10]%), 
Bajaj  ([5-10]%), Suzuki ( [0-5]%) and Kawasaki ( [0-5]%). Concerning small 
motorcycles, Honda’s market share would be [20-30]% in the EEA and [30 -40]% 
worldwide .359 The transaction will not result in any increment of the Notifying 
Parties’ and the Targets’ market share for the sale of motorcycles, where only Honda 
is active.  
(320)  Second, Honda purchased [Share of Honda’s demand for the relevant component 
met by the Targets ]% of its needs for injec tors for use in small motorcycles from the 
Targets. Therefore, prior to the transaction, the competitors in the upstream market 
supplied to the remaining OEM manufacturers and will be able to continue to do so 
after the transaction. Indeed, the results of the Commission market investigation 
showed that the majority of manufacturers of motorcycle components would have 
sufficient alternative customers to supply if Honda were to source all injectors for 
use in small motorcycles from the Integrated Company,360 making customer 
foreclosure unlikely as a consequence of the transaction.  
(321)  In view of the above, the Commission considers that the Integrated Company will 
likely have no ability to foreclose access to customers for the sale of injectors for use 
in small motor cycles.  
(B.ii.b)  No incentives to foreclose access to customers 
(322)  Injectors are just one component among the many parts comprising a motorcycle, 
and account for a very small portion ( [Percentage of the cost of a motorcycle 
comprised of the relevant component ]%)361 of the total cost of the motorcycle . 
Furthermore, Honda already purchases [ Share of Honda’s demand for the relevant 
component met by the Targets ]% of its needs for injectors for use in small 
motorcycles from the Targets , therefore any customer foreclosure strategy would 
only affect the remaining [ Share of Honda’s demand for the relevant component met 
                                                 
358  Reply to question 16 of questionnaire to competitors.  
359  Reply to question 1 of RFI 13.  
360  Reply to question 16 of questionnaire for competitors.  
361  Reply to question 1 of RFI 11.  


 
80 products at the upstream level of this vertically affected market at a worldwide 
level.364  
(329)  The Notifying Parties submit  that the Integrated Company  will have no ability to 
engage in input foreclosure in view of the fact that (i) this component it does n ot 
represent a significant cost factor relative to the price of motorcycles (ii)  the vast 
majority of HIAMS and Nissin Kogyo’s sales of this component are to Honda  
(iii) Manufacturers of motorcycles will continue to be able to source brake master 
cylinder s from a range of large international suppliers post -transaction which 
[Notifying Parties’ views of large international suppliers]  (iv) the average duration of 
contracts for the supply of motorcycle components is 3 -4 years (linked to the 
lifespan of the model of motorcycle), during which period suppliers are committed 
to supply minimum volumes of components at an agreed price.365  
(330)  The Notifying Parties submit that the Integrated Company will have no incentives to 
engage in input foreclosure in view of the fac t that (i) any attempted input 
foreclosure strategy would not be profitable, as it would simply result in the 
customer switching to one of the many alternative suppliers and lost revenues for the 
Integrated Company at the upstream level, with no increase i n Honda’s downstream 
revenues in the supply of motorcycles, (ii)  the proposed transaction will not 
materially change the existing incentives of the Parties to engage in any input 
foreclosure strategy, in view of Honda’s existing economic interest in Nissin  Kogyo 
(as at 31 March 2019, Honda owned 34.86% of the voting rights in Nissin Kogyo) 
and HIAMS’ minimal activities in the supply of brake master cylinders to third p arty 
customers other than Honda .366     
(331)  The Notifying Parties consider that the Integrated C ompany will have no ability or 
incentives to engage in customer foreclosure strategi es in view of the fact that 
(i) Honda’s market share at the downstream level in the supply of motorcycles 
(approximately [30-40]%) is limited, (ii) Honda currently purchase s [Percentage of 
Honda’s demand for the relevant component met by the Parties ]% of its total 
worldwide demand for this component from the Parties, (iii)  any customer 
foreclosure strategy would risk Honda’s security of supply of the relevant 
component part s, with no prospects of this resulting in increased prices at the 
upstream or downstream level.367   
(B) The Commission’s assessment  
(B.i) Input foreclosure  
(332)  Although some of the customers of motorcycle components responding to the 
Commission’s market investigation exp ressed concerns about the possibility to 
source brake master cylinders from other companies than the Targets,  others  
considered that they would have alternative suppliers.368 The Commission considers 
that the Integrated Company will not have the ability or the incentives to engage in 
input foreclosure strategies, for the reasons stated below.  
                                                 
364  Form CO, paragraph 1.486.  
365  Reply to question 2 of RFI 14.  
366  Reply to question 2 of RFI 14.  
367  Reply to question 4 RFI 15.  
368  Reply to question 12 of questionnaire to customers.  
 
81 (B.i.a)  No ability to foreclose access to inputs  
(333)  First, although the Targets’  market share in the worldwide market for brake master 
cylinders is [50 -60]%, a number of large int ernational suppliers compete in this 
market, namely Brembo (with a market share of [10 -20]%), Akebono (with a market 
share of [5 -10]%), Hubei (with [5 -10]%), Hengtong ( [5-10]%) and 
Endurance  ([5-10]%). The transaction results in a limited increment ([5 -10]%) of the 
Targets’ combined market share at the upstream level.  
(334)  Second, the majority of the respondents to the Commission’s market investigation 
confirmed that the same companies usually produce brake master cylinders for both 
motorcycles and for passenge r cars.369 In view of considerations of supply- side 
substitutability, should the market comprise the manufacture of brake master 
cylinders for use in motorcycles and in passenger cars, the Integrated Company’s 
market share p ost transaction would be below 20%  at worldwide and EEA level 
(estimated [10- 20]% on a worldwide basis, and [0 -5]% on an EEA wide basis) .370  
(335)  Third, input foreclosure may raise competition problems only if it concerns an 
important input for the downstream product (for example, when the input  concerned 
represents a significant cost factor relative to the price of the downstream product). 
This is not the case for brake master cylinders, which represent [ Percentage of the 
cost of a motorcycle comprised of the relevant component ]% of the total co st of 
manufacturing a motorcycle.371   
(336)  Fourth, Honda accounted for [ Percentage of HIAMS ’ sales of the relevant 
component accounted for by Honda ]% of HIAMS’ total sales372 and [Percentage of 
Nissin Kogyo’s sales of the relevant component accounted for by Honda ]% of the 
sales of Nissin Kogyo's  brake master cylinders for motorcycles. Therefore, prior to 
the transaction other OEM customers were able to source brake master cylinders 
from a range of other suppliers, and will be able to continue to do so after the 
transaction. Although some of the customers of motorcycle components responding 
to the Commission’s market investigation expressed concerns about the possibility to 
source brake master cylinders from other companies than the Targets,373 the 
manufacturers of mot orcycle components responding to the market investigation 
confirmed that they have spare capacity to increase production, should the combined 
entity engage in input foreclosure.374 Indeed, competitors in this market are large 
international suppliers (includi ng Brembo, Akebondo, Hubei, Hengtong and 
Endurance) and the Parties consider that [Parties’ views of large international 
suppliers] .375 
(337)  Fifth , the average duration of contracts for the supply of motorcycle components is 
3-4 years (linked to the lifespan of t he model of motorcycle), during which period 
suppliers are committed to supply minimum volumes of components at an agreed 
                                                 
369  Reply to question 3 of  questionnaire to competitors and reply to question 3 of questionnaire to customers.  
370  Reply to question 3 of RFI 7.  
371  Reply to question 1 of RFI 11.  
372  Reply to question 1 of RFI 8.  
373  Reply to question 12 of questionnaire to customers.  
374  Reply to ques tion 13 of questionnaire to Competitors. The response rate to this question was low, but 
those who did confirmed that they could increase capacity.  
375  Reply to question 2 of RFI 14.  
 
82 price. As such, third party customers of HIAMS and Nissin Kogyo are also 
contractually protected from input foreclosure for the lifesp an of the model of 
motorcycle that the brake master cylinders are being supplied for.376  
(338)  In view of the above, the Commission considers that the Integrated Company will 
likely have no ability to foreclose access to brake master cylinders for use in 
motorcyc les. 
(B.i.b)  No incentives to foreclose access to inputs  
(339)  Customers are contractually protected from input foreclosure for the lifespan of the 
motorcycle model that the part relates to. Furthermore, b rake master cylinders are 
just one component among the many parts  comprising a motorcycle, and account for 
a very small portion ( [Percentage of the cost of a motorcycle comprised of the 
relevant component ]%)377 of the total cost of the motorcycle. Therefore, an increase 
in the price of brake master cylinders  upstream woul d have no material impact on 
the downstream prices of motorcycles, rendering pointless any kind of foreclosure 
strategy attempted. Furthermore, because the market for motorcycle components is 
characterised by multi -market contacts, in case of foreclosure f or one product, OEMs 
could retaliate by switching away from the Integrated Company for other products.  
(340)  In view of the above, the Commission considers that the Integrated Company will 
likely have no incentives to foreclose access to brake master cylinders f or use in 
motorcycles. 
(B.i.c)  Overall likely impact on effective competition  
(341)  Given that (i) there is a number of competitors in the upstream market which can 
supply brake master cylinders for use in motorcycles, in particular in view of 
considerations of supply- side substitutability between the supply of brake master 
cylinders for use in motorcycles and in passenger cars, (ii) Honda accounts for 
[Percentage of Nissin’s sales of the relevant component accounted for by Hond a]% 
of Nissin’s total sales of brake master  cylinders for use in motorcycles worldwide 
and [Percentage of HIAMS’ sales of the relevant component accounted for by 
Honda ]% of HIAMS’, (iii) the results of the market investigation show that there is 
spare capacity in the market for the manufacture of b rake master cylinders for use in 
motorcycles, (iv) brake master cylinders are just one component among the many 
parts comprising a motorcycle, and account for a very small portion ( [Percentage of 
the cost of a motorcycle comprised of the relevant component ]%) of the total cost of 
the motorcycle, the Commission considers that, overall, the Integrated Company  
would not have the ability nor the incentives to foreclose access to brake master 
cylinders for use in small motorcycles.  
(B.ii) Customer foreclosure  
(342)  The manu facturers of motorcycle components responding to the Commission’s 
market investigation expressed that they would have sufficient alternative customers 
to supply if Honda were to source all brake master cylinders for motorcycles from 
                                                 
376  Reply to question 2 of RFI 14.  
377  Reply to question 1 of RFI 11.  
 
83 the Integrated Company.378 The Commission considers that the Integrated Company 
will not have the ability or the incentives to engage in customer  foreclosure 
strategies, for the reasons stated below.  
(B.ii.a) No ability to foreclose access to customers  
(343)  First, Honda’s market share for the m anufacture of motorcycles in the EEA is of 
[10-20]%, followed by Piaggio ( [10-20]%), Yamaha ( [10-20]%) and 
BMW  ([5-10]%). Worldwide, Honda’s market share for the manufacture of 
motorcycles is [30 -40]%, followed by Hero ( [10-20]%), Yamaha ( [5-10]%), 
Bajaj  ([5-10]%), Suzuki ([0 -5]%) and Kawasaki ( [0-5]%). The transaction will not 
result in any increment of the Notifying Parties’ and the Targets’ market share for 
the sale of motorcycles, where only Honda is active.  
(344)  Second, Honda purchased [ Share of Honda’s de mand for the relevant component 
met by the Targets ]% of its needs for brake master cylinders for motorcycles from 
the Targets. Therefore, prior to the transaction, the competitors in the upstream 
market supplied to the remaining OEM manufacturers and will be able to continue to 
do so after the transaction, making customer foreclosure unlikely as a consequence 
of the transaction. The results of the Commission market investigation showed that 
manufacturers of motorcycle components would have sufficient alternative 
customers to supply if Honda were to source all brake master cylinders for 
motorcycles  from the Integrated Company.379 
(345)  In view of the above, the Commission considers that  the Integrated Company will 
likely have no ability to foreclose access to customers for the sale of brake master 
cylinders for use in motorcycles.  
(B.ii.b)  No incentives to foreclose access to customers 
(346)  Brake master cylinders are just one component among the many parts comprising a 
motorcycle, and account for a very small portion ( [Percentage o f the cost of a 
motorcycle comprised of the relevant component ]%)380 of the total cost of the 
motorcycle. Furthermore, Honda already purchases [ Share of Honda’s demand for 
the relevant component met by the Targets ]% of its needs for brake master cylinders 
from the Targets.  
(347)  In view of the above, the Commission considers that the Integrated Company will 
likely have no incentives to foreclose access to customers for the sale of brake 
master cylinders for use in motorcycles.   
(B.ii.c) Overall likely impact on effective c ompetition  
(348)  Given that (i) there is a number of players in the downstream market to which to 
supply brake master cylinders for motorcycles , (ii) Honda purchases  [Share of 
Honda’s demand for the relevant component met by the Targets ]% of its needs for 
                                                 
378  Reply to question 16 of questionnaire to competitors. The response rate to this question was low, but those 
who did confirmed that they would have alternative customers.  
379  Reply to question 16 of questionnaire for competitors. The response rate to this quest ion was low, but 
those who did confirmed that they could increase capacity.  
380  Reply to question 1 of RFI 11.  


 
86 (A) The Notifying Parties’  view  
(352)  The Notifying Parties submit that the Integrated Company  will have no ability to 
engage in input foreclosure in view of the fact that (i) this component does not 
represent a significant cost factor relative to the price of motorcycles (ii) the majority 
of the Targets’ sales of this component are to Honda  (iii) m anufacturers of 
motorcycles will continue to be able to source this component from a range of large 
international suppliers post -transaction (iv) the  average duration of contracts for the 
supply of motorcycle components is 3- 4 years (linked to the lifespan of the model of 
motorcycle), during which period suppliers are committed to supply minimum 
volumes of components at an agreed price.383   
(353)  The Notifyin g Parties consider that the Integrated Company will have no incentives 
to engage in input foreclosure in view of the fact that (i) any attempted input 
foreclosure strategy would not be profitable, as it would simply result in the 
customer switching to one of the many alternative suppliers and lost revenues for the 
Integrated Company at the upstream level, with no increase in Honda’s downstream 
revenues in the supply of motorcycles, (ii)  the proposed transaction will not 
materially change the existing incent ives of the Parties to engage in any input 
foreclosure strategy, in view of Honda’s existing economic interest in Nissin Kogyo 
(as at 31 March 2019, Honda owned 34.86% of the voting rights in Nissin Kogyo) 
and HIAMS’ limited activities in the supply of flo ating caliper s and brake pads 
(assembled) to third party customers other than Honda.384    
(354)  The Notifying Parties  consider that the Integrated Company will have no ability or 
incentives to engage in customer foreclosure strategies in view of the fact that 
(i) Honda’s market share at the downstream level in the supply of motorcycles 
(approximately [30-40]%) is limited, (ii) Honda currently purchases [ Share of 
Honda’s demand for the relevant component met by the Parties ]% of its total 
worldwide demand for this c omponent from the Parties, (iii)  any customer 
foreclosure strategy would risk Honda’s security of supply of the relevant 
component parts, with no prospects of this resulting in increased prices at the 
upstream or downstream level.385    
(B) The Commission’s assessment  
(B.i) Input foreclosure  
(355)  Although some of the customers of motorcycle components responding to the 
Commission’s market investigation expressed concerns about the possibility to 
source floating caliper s and brake pads (assembled) from other companies than the 
Targets,  others considered that they would have alternative suppliers.386 The 
Commission considers that the Integrated Company will not have the ability or the 
incentives to engage in input foreclosure strategies, for the reasons stated below.  
                                                 
383  Reply to question 2 of RFI 14.  
384  Reply to question 2 of RFI 14.  
385  Reply to question 4 RFI 15.  
386  Reply to question 12 of questionnaire to customers.  
 
87 (B.i.a)  No ability  to foreclose access to inputs 
(356)  First, Nissin Kogyo’s  market share in the EEA market for floating caliper s and brake 
pads (assembled) for use in motorcycles is [30 -40]%, followed by a number of 
strong competitors: Brembo with [20 -30]% market share, Hengtong ([10-20]%), 
ADVICS ( [5-10]%), and Akebono ( [0-5]%). The transaction will not result in any 
increment of the Notifying Parties’ and the Targets’ market share of this component 
in the EEA.  Worldwide, the Integrated Company’s combined market share in the 
market for floating caliper s and brake pads (assembled) for use in motorcycles is 
higher ( [50-60]%), but it  is followed by a number of large international competitors: 
Brembo with [10 -20]% market share, Akebono ( [10-20]%), Hubei ([5 -10]%), 
Hengtong ( [5-10]%) and  Endurance ( [5-10]%).  
(357)  Second, input foreclosure may raise competition problems only if it concerns an 
important input for the downstream product (for example, when the input concerned 
represents a significant cost factor relative to the price of the do wnstream product). 
This is not the case for floating caliper  and brake pads (assembled), which represent 
[Percentage of the cost of a motorcycle comprised of the relevant component ]% of 
the total cost of manufacturing a motorcycle.387   
(358)  Third , although post transaction the Integrated Company’s market share is of 
[50-60]% in the manufacture and sale of floating caliper  and brake pads (assembled) 
for use in motorcycles worldwide, t he majority of the respondents to the 
Commission’s market investigation confirmed  that the same companies usually 
produce  floating caliper s and brake pads (assembled) for both motorcycles and for 
passenger cars.388 In view of considerations of supply- side substitutability, should 
the market comprise the manufacture of floating caliper s and brake pads (assembled) 
for use in motorcycles and in passenger cars, the Integrated Company’s market share 
post transaction would be below 20% at worldwide and EEA level.389 
(359)  Fourth, Honda accounted for [Percentage of Nissin Kogyo’s sales of the relevant 
component accounted for by Honda ]% of the sales of Nissin Kogyo's floating 
caliper s and brake pads (assembled) for use in motorcycles  and [Percentage of 
HIAMS’ sales of the relevant component accounted for by Honda ]% of HIAMS’ 
total sales for this product, worldwide .390 Therefore, prior to the transaction other 
OEM customers were able to source floating caliper s and brake pads (assembled) for 
use in motorcycles  from a range of other suppliers, and will be able to continue to do 
so after the transaction. Although some of the customers of motorcycle components 
responding to the Commission’s market investigation expressed concerns about the 
possibility to source from other companies than the Targets, others  said that they 
could find alternative suppliers.391 Further more,  all manufacturers of motorcycle 
components responding to the Commission’s market investigation confirmed that 
                                                 
387  Reply to question 1 of RFI 11.  
388  Reply to question 3 of questionnaire for competitors and reply to question 3 of questionnaire for 
customers.  
389  Reply to question 4 of RFI 7.  
390  Reply to question 2 of RFI 14.  
391  Reply to question 12 of questionnaire for customers.  
 
88 they have spare capacity to increase production,392 making input foreclosure unlikely 
as a consequence of the transaction.  
(360)  Fifth, the average duration of contracts for the supply of motorcycle components is 
3-4 years (linked to the lifespan of the model of motorcycle), during which period 
suppliers are committed to supply minimum volumes of components at an agreed 
price. As such, third party cus tomers of HIAMS and Nissin Kogyo are also 
contractually protected from input foreclosure for the lifespan of the model of 
motorcycle that the floating caliper s and brake pads (assembled) are being supplied 
for.393  
(361)  In view of the above, the Commission consid ers that the Integrated Company will 
likely have no ability to foreclose access to floating caliper s and brake pads 
(assembled) for use in motorcycles.  
(B.i.b)  No incentives to foreclose access to inputs  
(362)  Customers are contractually protected from input foreclosure  for the lifespan of the 
motorcycle model that the part relates to.  Furthermore, f loating caliper s and brake 
pads (assembled) are just one component among the many parts comprising a 
motorcycle, and account for a very small portion ( [Percentage of the cost of a 
motorcycle comprised of relevant component ]%)394 of the total cost of the 
motorcycle. Therefore, an increase in the price of floating caliper s and brake pads 
(assembled) upstream would have no material impact on the downstream prices of 
motorcycles, r endering pointless any kind of foreclosure strategy attempted. 
Furthermore, because the market for motorcycle components is characterised by 
multi- market contacts, in case of foreclosure for one product, OEMs could retaliate 
by switching away from the Inte grated Company for other products.  
(363)  In view of the above, the Commission considers that  the Integrated Company will 
likely have no incentives to foreclose access to floating caliper s and brake pads 
(assembled) for use in motorcycles.  
(B.i.c)  Overall likely impact o n effective competition  
(364)  Given that (i) there is a number of competitors in the upstream market, in particular 
in view of considerations of supply- side substitutability between floating caliper s 
and brake pads (assembled) for use in motorcycles and in passenger cars, (ii) Honda 
accounts for [ Percentage of Nissin’s sales of the relevant component accounted for 
by Honda ]% of total sales of Nissin’s  floating caliper s and brake pads (assembled) 
for use in motorcycles worldwide  and [Percentage of HIAMS’ sales of the relevant 
component accounted for by Honda ]% of HIAMS’ , (iii) the results of the market 
investigation show that there is spare capacity in the market for the manufacture of  
floating caliper s and brake pads (assembled) for use in motorcycles, (iv) float ing 
caliper s and brake pads (assembled) a re just one component among the many parts 
comprising a motorcycle, and account for a very small portion ( [Percentage of the 
cost of a motorcycle comprised of the relevant component ]%) of the total cost of the 
motor cycle, the Commission considers that, overall, the Integrated Company would 
                                                 
392  Reply to question 13 of questionnaire for competitors.  
393  Reply to  question 2 of RFI 14.  
394  Reply to question 1 of RFI 11.  
 
89 not have the ability or the incentives to foreclose access to floating caliper s and 
brake pads (assembled) for use in motorcycles.  
(B.ii) Customer foreclosure  
(365)  The manufacturers of motorc ycle components responding to the Commission’s 
market investigation stated  that they would have sufficient alternative customers to 
supply if Honda were to source all floating caliper s and brake pads (assembled) for 
use in motorcycles from the Integrated C ompany.395 The Commission considers that 
the Integrated Company will not have the ability or the incentives to engage in 
customer foreclosure strategies related to floating caliper s and brake pads 
(assembled) for use in motorcycles, for the reasons stated below.  
(B.ii.a) No ability to foreclose access to customers  
(366)  First, Honda’s market share for the manufacture of motorcycles in the EEA is of 
[10-20]%, followed by Piaggio ( [10-20]%), Yamaha ( [10-20]%) and 
BMW  ([5-10]%). Worldwide, Honda’s market share for the manufac ture of 
motorcycles is [30 -40]%, followed by Hero ( [10-20]%), Yamaha ( [5-10]%), 
Bajaj  ([5-10]%), Suzuki ( [0-5]%) and Kawasaki ( [0-5]%). The transaction will not 
result in any increment of the Notifying Parties’ and the Targets’ market share for 
the sale of  motorcycles, where only Honda is active.  
(367)  Second, Honda purchased [ Share of Honda’s demand for the relevant component 
met by the Targets ]% of its needs for floating caliper s and brake pads (assembled) 
for use in motorcycles  from the Targets. Therefore, pr ior to the transaction, the 
competitors in the upstream market supplied to the remaining OEM manufacturers 
and will be able to continue to do so after the transaction. Indeed, the results of the 
Commission market investigation showed that the majority of m anufacturers of 
motorcycle components responding would have sufficient alternative customers to 
supply if Honda were to source all floating caliper s and brake pads (assembled) for 
use in motorcycles from the Integrated Company,396 making customer foreclosure  
unlikely as a consequence of the transaction.   
(368)  In view of the above, the Commission considers that the Integrated Company will 
likely have no ability to foreclose access to customers for the sale of floating caliper s 
and brake pads (assembled) for use in  motorcycles . 
(B.ii.b)  No incentives to foreclose access to customers 
(369)  Floating caliper s and brake pads (assembled) are just one component among the 
many parts comprising a motorcycle, and account for a very small portion 
(Percentage of the cost of a motorcycle comp rised of the relevant component ]%)397 
of the total cost of the motorcycle. Furthermore,  prior to the transaction Honda 
purchased [Share of Honda’s demand for the relevant component met by the 
Targets] % of its needs for floating caliper s and brake pads (assembled) for use in 
                                                 
395  Reply to question 16 of questionnaire to competitors. The response rate to this question was low, but those 
who replied confirmed that they would have alternative customers.  
396  Reply to question 1 6 of the questionnaire for competitors.  
397  Reply to question 1 of RFI 11.  


 
92 which period suppliers are c ommitted to supply minimum volumes of components at 
an agreed price.401   
(376)  The N otifying Parties submit that the Integrated Company will have no incentives to 
engage in input foreclosure in view of the fact that (i) any attempted input 
foreclosure strategy wo uld not be profitable, as it would simply result in the 
customer switching to one of the many alternative suppliers and lost revenues for the 
Integrated Company at the upstream level, with no increase in Honda’s downstream 
revenues in the supply of motorcycles, (ii)  the proposed transaction will not 
materially change the existing incentives of the Parties  to engage in any input 
foreclosure strategy, in view of Honda’s existing economic interest in Showa (as at 
31 March 2019, Honda owned 33.5% of the voting rights in Showa) and Showa’s 
minimal activities in the supply of shock absorber to third party customers other than 
Honda.402     
(377)  The N otifying Parties consider that the Integrated Company will have no ability or 
incentives to engage in customer foreclosure strategies in view of the fact that 
(i) Honda’s market share at the downstream level in the supply of motorcycles 
(approximately [30-40]%) is limited, (ii) Honda currently purchases [ Share of 
Honda’s demand for the relevant component met by the Targets ]% of its total 
worldwide demand for this component from the Targets, (iii)  any customer 
foreclosure strategy would risk Honda’s security of supply of the relevant 
component parts, with no prospects of this resulting in increased prices at the 
upstream or dow nstream level.403   
(B) The Commission’s assessment  
(B.i) Input foreclosure  
(378)  The majority of customers of motorcycle components responding to the 
Commission’s market investigation stated  that they would be able to source shock 
absorbers from other companies than the Ta rgets.404 The Commission considers that 
the Integrated Company will not have the ability or the incentives to engage in input 
foreclosure strategies, for the reasons stated below.  
(B.i.a)  No ability to foreclose access to inputs  
(379)  First, input foreclosure may raise c ompetition problems only if it concerns an 
important input for the downstream product (for example, when the input concerned 
represents a significant cost factor relative to the price of the downstream product). 
This is not the case for shock absorbers, which represent only [ Percentage of the cost 
of a motorcycle comprised of the relevant component ]% of the total cost of 
manufacturing a motorcycle.405 
(380)  Second, in spite of Showa’s relatively high market share ([50 -60]%), a number of 
competitors remain in the ma rket for shock absorbers for use in motorcycles, 
                                                 
401  Reply to question 2 of RFI 14.  
402  Reply to  question 2 of RFI 14.  
403  Reply to question 4 RFI 15.  
404  Reply to question 12 of questionnaire to customers.  
405  Reply to question 1 of RFI 11.  
 
93 including  Endurance Technologies Limited ( [10-20]%), KYB ( [10-20]%), Gabriel 
India Limited ([10 -20]%), WP Suspension and Ohlins (both [0 -5]%). Furthermore, 
even if against the Notifying Parties’ views, the majority of the respondents to the 
Commission’s market investigation confirmed that the same companies usually 
produce shock absorbers for both motorcycles and for passenger cars.406 In view of 
considerations of supply- side substitutability, should the marke t comprise the 
manufacture of shock absorbers  for use in motorcycles and in passenger cars, the 
Integrated Company’s market share post transaction would be  [30-40]% (Showa’s 
market share being of [20 -30]% and HIAMS’ [5 -10]%).407   
(381)  Third , Honda accounted for [ Share of the Targets’ sales of the relevant component 
made to Honda ]% of the sales of the Targets’ shock absorbers for use in 
motorcycles. Therefore, prior to the transaction other OEM customers were able to 
source shock absorbers for use in motorcycles f rom a range of other suppliers . 
Furthermore, the Commission’s market investigation confirmed that all 
manufacturers of motorcycle components responding have spare capacity to increase 
production of shock absorbers for use in motorcycles,408 and that a majori ty of 
customers of motorcycle components responding would be able to source shock 
absorbers for use in motorcycles from other companies than the Targets,409 making 
input foreclosure unlikely as a consequence of the transaction. The Notifying Parties 
consider  that suppliers in this market (including Endurance Technologies Limited, 
KYB, Gabriel India Limited  and WP Suspension OHLINS) are [ Notifying Parties ’ 
view of suppliers of shock absorbers] .410  
(382)  Fifth, the average duration of contracts for the supply of motor cycle components is 
3-4 years (linked to the lifespan of the model of motorcycle), during which period 
suppliers are committed to supply minimum volumes of components at an agreed 
price.  As such, third party customers of Showa are also contractually prote cted from 
input foreclosure for the lifespan of the model of motorcycle that the shock absorbers 
are being supplied for.411 
(383)  In view of the above, the Commission considers that the Integrated Company will 
likely have no ability to foreclose access to shock absorbers  for use in motorcycles.  
(B.i.b)  No incentives to foreclose access to inputs  
(384)  Customers are contractually protected from input foreclosure for the lifespan of the 
motorcycle model that the part relates to. Furthermore, s hock absorbers are just one 
component among the many parts comprising a motorcycle, and account for a very 
small portion ([ Percentage of the cost of a motorcycle comprised of the relevant 
component ]%)412  of the total cost of the motorcycle. Therefore, an increase in the 
price of shock absorbers  upstream would have no material impact on the 
downstream prices of motorcycles, rendering pointless any kind of foreclosure 
strategy attempted. Furthermore, because the market for motorcycle components is 
                                                 
406  Reply to question 3 of questionnaire to competitors and reply to question 3 of questionnaire to customers.  
407  Reply to question 4 of RFI 7, reply to question 1 of RFI 15.  
408  Reply to question 13 of questionnaire to competitors.  
409  Reply to question 12 of questionnaire to customers.  
410  Reply to question 2 of RFI14.  
411  Reply to question 2 of RFI 4.  
412  Reply to ques tion 1 of RFI 11.  
 
94 characterised by multi -market contacts, in case of  foreclosure for one product, OEMs 
could retaliate by switching away from the Integrated Company for other products.  
(385)  In view of the above, the Commission considers that the Integrated Company will 
likely have no incentives to foreclose access to shock abso rbers for use in 
motorcycles. 
(B.i.c)  Overall likely impact on effective competition  
(386)  Given that (i) there is a number of competitors in the upstream market which can 
supply shock absorbers , also under considerations of supply- side substitutability 
between shock ab sorbers for use in motorcycles and in passenger cars,  (ii) Honda 
accounts for [ Share  of Showa’s sales of the relevant component accounted for by 
Honda ]% of total sales of Showa’s shock absorbers for use in motorcycles 
worldwide, (iii) the results of the ma rket investigation show that there is spare 
capacity in the market for the manufacture of shock absorbers for use in 
motorcycles, (iv) shock absorbers are just one component among the many parts 
comprising a motorcycle, and account for a very small portion ([Percentage of the 
cost of a motorcycle comprised of the relevant component ]%) of the total cost of the 
motorcycle, the Commission considers that, overall, the Integrated Company would 
not have the ability nor the incentives to foreclose access to shock absorbers for use 
in motorcycles.  
(B.ii) Customer foreclosure  
(387)  Manufacturers of motorcycle components responding to the Commission’s market 
investigation expressed that they would have sufficient alternative customers to 
supply if Honda were to source all shock a bsorbers for motorcycles from the 
Integrated Company.413 The Commission considers that the Integrated Company will 
not have the ability or the incentives to engage in customer foreclosure strategies for 
the reasons stated below.  
(B.ii.a) No ability to foreclose access to customers  
(388)  First, Honda’s market share for the manufacture of motorcycles in the EEA is of 
[10-20]%, followed by Piaggio ( [10-20]% ), Yamaha ( [10-20]%) and 
BMW  ([5-10]%). Worldwide, Honda’s market share for the manufacture of 
motorcycles is [30 -40]%, f ollowed by Hero ( [10-20]%), Yamaha ( [5-10]%), 
Bajaj  ([5-10]%), Suzuki ( [0-5]%) and Kawasaki ( [0-5]%). The transaction will not 
result in any increment of the Notifying Parties’ and the Targets’ market share for 
the sale of motorcycles, where only Honda is active.  
(389)  Second, Honda purchased [ Share of Honda’s demand for the relevant component 
met by the Targets ]% of its needs for shock absorbers for use in motorcycles from 
the Targets. Therefore, prior to the transaction, the competitors in the upstream 
market supplied to the remaining OEM manufacturers. Indeed, the majority of the 
manufacturers of motorcycle components that responded to the market investigation 
indicated that post -transaction, sufficient alternative customers would remain to 
supply if Honda wer e to source all shock absorbers for use in motorcycles from the 
                                                 
413  Reply to question 16 of questionnaire to competitors.  
 
95 Integrated Company,414 making customer foreclosure unlikely as a consequence of 
the transaction.  
(390)  In view of the above, the Commission considers that the Integrated Company will 
likely have no a bility to foreclose access to customers for the sale of shock absorbers  
for use in motorcycles.  
(B.ii.b)  No incentives to foreclose access to customers 
(391)  Shock absorbers are just one component among the many parts comprising a 
motorcycle, and account for a very small  portion ( [Percentage of the cost of a 
motorcycle comprised of the relevant component ]%)415  of the total cost of the 
motorcycle. Furthermore, Honda already purchases [Share of Honda’s demand for 
the relevant component met by the Targets] % of its needs for s hock absorbers for 
use in small motorcycles from the Targets and any customer foreclosure strategy 
would only affect the remaining [Share of Honda’s demand for the relevant 
component met by the Targets] % with no prospects of resulting in increased prices a t 
the upstream or downstream level. Therefore, the incentives to engage in customer 
foreclosure are low.  
(B.ii.c) Overall likely impact on effective competition  
(392)  Given that (i) there is a significant number of players in the downstream market to 
which to supply shock absorbers for use in motorcycles, (ii) Honda purchased 
[Percentage of Honda’s demand for the relevant component met by the Targets ]% of 
its needs for shock absorbers for motorcycles from the Targets, (iii) the results of the 
market investigation show th at the majority of competitors would have sufficient 
alternative customers to supply if Honda were to source all shock absorbers for 
motorcycles from the Integrated Company, (iv) shock absorbers are just one 
component among the many parts comprising a motorcycle and account for a very 
small portion ([ Percentage of the cost of a motorcycle comprised of the relevant 
component ]%) of the total cost of the motorcycle, the Commission considers that, 
overall, the Integrated Company would not have the ability or th e incentives to 
foreclose customer access for the sale of shock absorbers for use in motorcycles.  
(B.iii)  Conclusion on input and customer foreclosure  
(393)  Based on the considerations above, the Commission considers that the transaction 
does not raise serious doubts a s to its compatibility with the internal market in 
relation to the vertical link between the market for the manufacture and sale of shock 
absorbers for use in motorcycles and the market for the manufacture and sale of 
motorcycles. 
4.5.11. Vertical ly affected marke ts resulting from Honda’s presence in the downstream 
market for motorcycles  
(394)  Vertically affected markets also arise for 11  further components for use in 
motorcycles : electronic throttle bodies, ABS, brake pads (as a non- assembled 
component), panel brakes, handle lever brackets, CBS, fixed caliper s and brake pads 
                                                 
414  Reply to question 16 of questionnaire for competitors.  
415  Reply to question 1 of RFI 11.  

 
97 clearly have no ability to engage in input foreclosure because of the range of 
alternative supply options available to customers.416  
(396)  Notifying Parties submi t that Honda’s market share at the downstream level in the 
supply of motorcycles and small motorcycles is  only approximately [30 -40]%, and 
the Integrated Company would therefore have no ability to engage in a customer 
foreclosure strategy, as rivals will c ontinue to be able to sell to a large number of 
motor cycle manufacturers, including Yamaha, Kawasaki, Hero, Bajaj, Suzuki, 
BMW, Piaggio, and Kymco. Moreover, the Notifying Parties submit  that Honda’s 
downstream market share significantly overstates its imp ortance as a customer to 
third party suppliers of these products, in view of the proportion of Honda's total 
purchases that are from the Targets (see the table provided in paragraph (394)  
above) . According to the  Notifying Parties, a ny input foreclosure strategy would risk 
Honda’s security of supply of the relevant component parts, with no prospects of this 
resulting in increased prices at the  upstream or downstream level and, a s such, the 
Integrated Company would have no incentive to engage in such a strategy.417   
(B) The Commission’s assessment  
(B.i) Input foreclosure  
(B.i.a)  No ability to foreclose  
(397)  First, on all  upstream markets, the Parties’ worldwide market shares are below 30% 
and in most cases far below . Therefore , any input f oreclosure strategy is unlikely to 
succeed as the Parties only account for a very small proportion of the overall supply 
of the products in question.  
(398)  Second, input foreclosure may raise competition problems only if it concerns an 
important input for the d ownstream product (for example, when the input concerned 
represents a significant cost factor relative to the price of the downstream product). 
This is not the case for any of the motorcycle components where the Integrated 
Company’s market share is below 3 0%. Each of them accounts for a very small 
portion ( [Percentage of the cost of a motorcycle comprised of the relevant 
component ]% in all cases except drivetrain systems, which account for [Percentage 
of the cost of a motorcycle comprised of the cost of dri vetrain systems] %) of the 
total cost of manufacturing a motorcycle.418 
(399)  Third , in the case of ABS for motorcycles, handle lever brackets for motorcycles, 
CBS for motorcycles , and drivetrain systems (shaft drive) for motorcycles, sales to 
Honda represent [ Thre shold share above which sales are made to Honda] % of total 
sales of the Targets for each component. In the case of brake pads (as a non -
assembled component) for motorcycles , panel brakes for motorcycles, fixed caliper s 
and brake pads (assembled) for motorc ycles, fixed caliper s (as a non -assembled 
component) for motorcycles, and floating caliper s (non- assembled) for motorcycles 
sales to Ho nda represent [Range between which the Targets’ share of total sales of 
each component is made to Honda ]% of total sales of the Targets for each 
component. Therefore, prior to the transaction other OEM customers were able to 
                                                 
416  Reply to question 4 of RFI 15.  
417  Reply to question 4 of RFI 15.  
418  Reply to question 1 of RFI 11.  
 
98 source these components  from a range of other suppliers, and will be able to 
continue to do so after the transaction. Only in the case of electronic thr ottle bodies 
for motorcycles and speed meter gears for motorcycles sales to Honda represent less 
[Details of Targets’ share of sales of each component made to Honda]  of the total 
sales of the Targets. However, because of the low market share of the Integra ted 
Company in this component market speed meter gears for motorcycles (in both cases 
below 30% worldwide ), any input foreclosure strategy is unlikely to succeed. 
(400)  Fourth, the average duration of contracts for the supply of motorcycle components is 
3-4 year s (linked to the lifespan of the model of motorcycle), during which period 
suppliers are committed to supply minimum volumes of components at an agreed 
price.  As such, third party customers of the Targets are also contractually protected 
from input forecl osure for the lifespan of the model of motorcycle that the 
components are being supplied for.419 
(401)  In view of the above, the Commission considers that  the Integrated Company will 
likely have no ability to engage in input foreclosure strategies. 
(B.i.b)  No incentives t o foreclose  
(402)  Customers are contractually protected from input foreclosure for the lifespan of the 
motorcycle model that the part relates to. Furthermore, e lectronic throttle bodies, 
ABS, brake pads (as a non- assembled component), panel brakes, handle lever 
brackets, CBS, fixed caliper s and brake pads (assembled), fixed caliper s (as a non -
assembled component) , floating caliper s (non- assembled),  speed meter gears and 
drivetrain systems (shaft drive), are just a few components among the many parts 
comprising a  motorcycle, and each of them accounts for a very small portion 
([Percentage of the cost of a motorcycle comprised of the relevant component ]% in 
all cases except drivetrain systems, which account for [ Percentage of the cost of a 
motorcycle comprised of the cost of drivetrain systems] %) of the total cost of the 
motorcycle. Therefore, an increase in the price of any of these components would 
have no material impact on the prices of motorcycles, rendering pointless any kind 
of foreclosure strategy attempted. Furthermore, because the market for motorcycle 
components is characterised by multi -market contacts, in case of foreclosure for one 
product, OEMs could retaliate by switching away from the Integrated Company for 
other products.  
(B.i.c)  Overall likely impact on eff ective competition  
(403)  In view of the above, the Commission considers that the Integrated Company will 
likely have no incentives to engage in input foreclosure strategies.   
(404)  Given (i) the limited market shares of the Integrated Company in the sale of 
electronic  throttle bodies, ABS, brake pads (as a non- assembled component), panel 
brakes, handle lever brackets, CBS, fixed calipers and brake pads (assembled), fixed 
calipers (as a non - assembled component), floating calipers (non- assembled), speed 
meter gears and drivetrain systems (shaft drive), floating calipers (non -assembled) 
for motorcycles and speed meter gears for motorcycles  (ii) that Honda accounts for 
a majority of total sales of the Targets’ sales of each of those components (except for 
electronic throttle bodies and speed meter gears where the Targets’ market share is 
                                                 
419  Reply to question 2 of RFI 4.  
 
99 below 30%) (iii) that each of these components are just one component among the 
many parts comprising a motorcycle, and account for a very small portion 
([Percentage of the cost of a motor cycle comprised of the relevant component] % 
except for drivetrain systems, which account for [Percentage of the cost of a 
motorcycle comprised of the cost of drivetrain systems] %) of the  total cost of the 
motorcycle, the Commission considers that, overall, the Integrated Company would 
not have the ability nor the incentives to foreclose access to any of these 
components.  
(B.ii) Customer foreclosure  
(B.ii.a) No ability to foreclose  
(405)  First, Honda’s market share for the manufacture of motorcycles in the EEA is of 
[10-20]%, fo llowed by Piaggio ( [10-20]%), Yamaha ( [10-20]%) and 
BMW  ([5-10]%). Worldwide, Honda’s market share for the manufacture of 
motorcycles is [30 -40]%, followed by Hero ( [10-20]%), Yamaha ( [5-10]%), 
Bajaj  ([5-10]%), Suzuki ( [0-5]%) and Kawasaki ( [0-5]%). In vie w of Honda’s 
limited market share in the manufacture and sale of motorcycles and the presence of 
a number of important competitors,  a customer foreclosure strategy is unlikely to 
succeed.  
(406)  Second, Honda already accounts for most of the sales/purchase relati onships with the 
Targets (see Table 9). Honda purchased [Share of Honda’s demand for the relevant 
components met by the Targets] % of its needs for electronic throttle bodies, brake 
pads (as a non -assembled component ), handle lever brackets, CBS, fixed caliper s 
and brake pads (assembled), fixed caliper s (as a non -assembled component) and 
drivetrain systems (shaft drive) for motorcycles , floating caliper s (non -assembled) 
for motorcycles and speed meter gears for motorc ycles  from the Targets. In the case 
of ABS and panel brakes the percentage was of [Share of Honda’s demand for the 
relevant components met by the Targets] %. Therefore, prior to the transaction, the 
competitors in the upstream market supplied to the remaining OEM manufacturers 
and will be able to continue to do so after the transaction. In view of the above, the 
Commission considers that the Integrated Company will likely have no ability to 
engage in customer foreclosure strategies.  
(B.ii.b)  No incentives to forecl ose access to customers 
(407)  Electronic  throttle bodies, ABS, brake pads (as a non- assembled component), panel 
brakes, handle lever brackets, CBS, fixed caliper s and brake pads (assembled), fixed 
caliper s (as a non -assembled component), floating caliper s (non- assembled),  speed 
meter gears and drivetrain systems (shaft drive) are just one component among the 
many parts comprising a motorcycle. Each of them accounts for a very small portion 
([Percentage of the cost of a motorcycle comprised of the relevant compo nent]% in 
all cases except drivetrain systems, which account for [ Percentage of the cost of a 
motorcycle comprised of the cost of drivetrain systems] %) of the total cost of the 
motorcycle. Therefore, the incentives to engage in customer foreclosure are low .  
 
100 (B.ii.c) Overall likely impact on effective competition  
(408)  Given that (i) there is a significant number of players in the downstream OEM 
market, (ii) Honda purchased most  of its needs for these components from the 
Targets, (i ii) these components are just one component among the many parts 
comprising a motorcycle and a ccount for a very small portion of the total cost of the 
motorcycle, the Commission considers that, overall, the Integrated Company would 
not have the ability or the incentives to engage in customer for eclosure strategies.  
(B.iii)  Conclusion on input and customer foreclosure  
(409)  Based on the considerations above, the Commission considers that the transaction 
does not raise serious doubts as to its compatibility with the internal market in 
relation to the vertical link between the market for the manufacture and sale of 
electronic throttle bodies, ABS, brake pads (as a non- assembled component), panel 
brakes, handle lever brackets, CBS, fixed caliper s and brake pads (assembled), fixed 
caliper s (as a non -assembled compo nent), floating caliper s (non- assembled),  speed 
meter gears and drivetrain systems (shaft drive) for use in motorcycles and the 
market for the manufacture and sale of motorcycles.  
4.6. Conglomerate non -coordinated effects  
4.6.1. Analytical  framework  
(410)  Pursuant to the N on-Horizontal Merger Guidelines, in most circumstances, 
conglomerate mergers do not lead to any competition problems.420 However, 
foreclosure effects may arise in conglomerate mergers when the combination of 
products in related markets may confer on the Integrated Company the ability and 
incentive to leverage a strong market position from one market to another closely 
related market by means of tying or bundling or other exclusionary practices. 421  
(411)  The Non- Horizontal Merger Guidelines distinguish between bundl ing, which usually 
refers to the way products are offered and priced by the Integrated Company  and 
tying, usually referring to situations where customers that purchase one good (the 
tying good) are required to also purchase another good from the producer (the tied 
good). 422  
(412)  Within bundling practices, a distinction is also made between pure bundling and 
mixed bundling.423 In the case of pure bundling, the products are only sold jointly in 
fixed propor tions. With mixed bundling, the products are also available  separately, 
but the sum of the stand- alone prices is higher than the bundled price. 424  Tying can 
take place on a technical or contractual basis. For instance, technical tying occurs 
when the tying product is designed in such a way that it only works with the tied 
product (and not with the alternatives offered by competitors).425  
                                                 
420  Non-Horizontal Merger Guidelines, paragraph 92.   
421  Non-horizontal Merger Guidelines, paragraph 93.   
422  Non-horizontal Merger Guidelines, paragraph 95 et seq.   
423  Non-horizontal Merger Guidelines, paragra ph 95.   
424  Non-horizontal Merger Guidelines, paragraph 96.   
425  Non-horizontal Merger Guidelines, paragraph 97.   
 
101 (413)  While tying and bundling have often no anticompetitive consequences, in certain 
circumstances such practices may lead to a reduction in actual or potential 
competitors’ ability or incentive to compete. This may reduce the competitive 
pressure on the Integrated Company allowing it to increase prices or deteriorate 
supply conditions in other ways.426   
(414)  In assessing the likelihood of such a scenario of conglomerate effects, the 
Commission  examines, first, whether the merged firm would have the ability to 
foreclose its rivals, second, whether it would have the economic incentive to do so 
and, third, whether a foreclosure strategy would have a significant detrimental effect 
on competition, t hus causing harm to consumers. In practice, these factors are often 
examined together as they are closely intertwined.427  
4.6.2. Leveraging the Parties’ position in vehicle control technologies into in the areas of 
automated driving, brake -by-wire and electrical/electronic vehicle architecture  
(415)  As part of the proposed transaction, the Parties intend to combine the vehicle control 
technologies of each of the Parties to expand the scope of (i) automated driving428 
(ii) brake -by-wire429 and (iii) electrical/electronic veh icle architecture :430 To date, 
this technology is in development and none of the Parties currently supplies brake -
by-wire components, automated driving components or electrical/electronic vehicle 
architecture components.431 HIAMS  has not […] any brake -by-wire components, 
automated driving components or electrical/electronic vehicle architecture 
components, and [Business plans of HIAMS] .432 
(416)  Nissin Kogyo is  [Business plans of Nissin Kogyo]. Nissin Kogyo’s existing products 
(e.g., hydraulic calipers) can be used for  both automated and non- automated driving 
systems. Nissin Kogyo’s products can also be used for electric vehicles [Business 
plans of Nissin Kogyo] .433 
(417)  Showa manufactures certain components which can be used for electrical vehicles; 
however it is not a major supplier of these components. Showa is [Business plans of 
Showa] .434  
(418)  Keihin  has not been able to take a leading position in the supply and development of 
either brake by wire components, automated driving components and systems or 
electrical/electronic vehi cle architecture components. [Business plans of Keihin] .435 
                                                 
426  Non-horizontal Merger Guidelines, paragraph 92 -93.   
427  Non-horizontal Merger Guidelines, paragraph 94.   
428  The term “automated driving” will be used to describe products in the category of Advanced Driver 
Assistance Systems (ADAS). ADAS encompasses a broad range of features that enable a vehicle to “see,” 
“sense” and “react” to the objects that surround it and will eventually evolve into f ully autonomous 
driving systems.  
429  Braking systems with purely electrical/electronic generation, transmission and control of the braking 
force, without pneumatic or hydraulic back- up function.  
430  Vehicle architecture based on electronic/electric component s used for automated driving and electric 
vehicles. Reply to question 3 of RFI 6.  
431  Reply to question 4 of RFI 20.  
432  Reply to question 3 of RFI 6. Reply to question 4 of RFI 20.  
433  Reply to question 4 of RFI 20.  
434  Reply to question 6 of RFI 7.  
 
102 (419)  In addition, Hitachi intends to support the Integrated Company in contributing to the 
improvement of safety and mobility services, particularly in the field of connected 
cars, by using digital technologies such as ‘Lumada’ (a collective term for Hitachi’s 
solutions, services, and technology that utili se digital technology for creating value 
through customer data).436  
(420)  Following concerns  raised  in the market investigation, the Commission has assessed 
in particular the ability and the incentive of the Integrated Company engaging in the 
tying/bundling practices mentioned in Section 4.6.1, for the following products:  
(a) Brake parts, including ABS   
(b) Anti-vibration systems and components, including shock absorbers  
(c) ECU  
(421)  The concerns are that these components , in which the Parties  are currently active  
could be combined and sold in a bundle or tied  with technologies for automated 
driving, brake -by-wire and electrical/ele ctronic vehicle architecture  and thereby 
foreclosing access to customers for upstream competitors of the Targets.  For 
instance,  the Integrated Company could bundle/tie ECUs and brake components into 
complex integrated systems for automated driving technologies  such as Adaptive 
Cruise Control or cloud- based preventive accident systems, or offer specific, 
bundled/tied  components for use in electrical/electronic vehicle architecture, such as 
brake -by-wire braking systems . [Information concerning potential futu re business 
plans of the Parties] :437 
(422)  Whereas the Parties do not yet sell any product tec hnologies for automated driving , 
brake -by-wire and electrical/electronic vehicle architecture438 (see 
paragraphs  (415) -(419) ), the Commission analysed whether the Integrated Company 
would have the ability and incentive to foreclose competing suppliers by bundling 
these products once they are put on the market. 
4.6.3. The Notifying Parties’ vie w 
(423)  According to the Notifying Parties, t he combination of these newly developing 
technologies of the Parties cannot give rise to any transaction specific conglomerate 
effects concerns. While the  Notifying Parties have identified as one of the benefits of 
the proposed transaction the combination of the Notifying Parties’ and the Targets’ 
advanced technologies, these products ( automated driving technology, brake -by-wire 
                                                                                                                                                      
435  Reply to question 4 of RFI 20.  
436  Reply to question 6  of RFI 7. 
437  Reply to RFI of 16 July to a competitor. The Notifying Parties confirmed that no affected markets arise 
under any plausible market definition for any of these products, as these are not currently  supplied by the 
Targets on a merchant market. Honda only recently launched its first electric car and has no market share 
in the market segment for electric vehicles (Reply to question 3 of RFI20). The market definition of these 
products and technologies is therefore not discussed.  
438  The Commission has previously analysed markets automotive components used for automated driving, 
brake -by-wire and electric/electronic vehicle architecture and for instance defined separate markets for 
truck ECUs for automat ed driving (Case COMP/M.9383 – ZF/Wabco) and Adaptive Cruise Control (Case 
No IV/M.1332 - THOMSON / LUCAS). The Notifying Parties have confirmed that they are at not active 
in these markets under any plausible market definition. ( Reply to question 3 of RFI  6.) 
 
103 and electrical/electronic vehicle architecture ) are currently at an early stage of 
resear ch and development, meaning that the Parties do not yet have a market 
presence for automated driving technologies, brake -by-wire and electrical/electronic 
vehicle architecture : 
(424)  First , the Notifying Parties submit that they would have no ability or incentive to 
foreclose competing component manufacturers by bundling /tying  their components , 
as the tender process for automotive components depends on whether OEMs intend 
to purchase components on a bundle /integrated  basis or to purchase specific 
components on an individual basis (sourcing different components from different 
suppliers) . The OEMs themselves have significant  buyer power and would be able to 
decide by themselves whether to purchase multiple component parts together or 
separately.439 
(425)  Second, the Notifyi ng Parties submit that OEMs do not  typically source all 
components from a single component manufacturer. T here remain numerous other 
competing suppliers of each of the component parts supplied by the Targets, from 
which OEMs could continue to source the re levant components independently. The 
component parts supplied by the Targets are largely homogenous across the industry, 
such that the Targets’  specific products are not viewed by customers as differentiated 
from other alternative sources of supply .440  
(426)  As f or automated driving technologies, brake -by-wire and electrical/electronic 
vehicle architecture, it is difficult to state with any precision how the market will 
evolve or who the main players are likely to be, although the Parties understand that 
all of th e main automotive parts suppliers are generally developing component parts 
for electric/electronic and automated vehicles, [Parties’ views of other sources of 
supply] .441 
(427)  Therefore , the Notifying Parties submit that the Integrated Company would have 
neither the ability nor an incentive to foreclose competitors by bundling /tying, as it 
would not be profitable for the Integrated Company, as OEM customers may instead 
purchase the individual component parts from other competing suppliers and so the 
Integrated Com pany’s sales of components may reduce.442   
(428)  Equally, the Notifying Parties  submit that, as OEM customers typically multi -source 
and purchase different component parts from different suppliers, if the Integrated 
Company were to switch to supplying a bundle  or tied product , custom ers might  
choose to source all their component parts individually from competing component 
suppliers.443 
(429)  The Notifying Parties submit that the evolution of the market for the supply of 
electric vehicles will not have any impact on the Integrated Company’s current lack 
of ability or incentive to engage in an anticompetitive bundling strategy. Given that 
its development and the Parties activities in this market are at an early stage, it is 
                                                 
439  Reply to question 3 of RFI 6.  
440  Reply to question 3 of RFI 6.  
441  Reply to RFI 7, paragraph 6.1.  
442  Reply to question 3 of RFI 6.  
443  Reply to question 3 of RFI 6.  
 
104 difficult to predict how the market will evolve or who the main players are likely to 
be.444 
4.6.4. The Commission’s assessment  
(430)  The Commission has investigated whether the proposed transaction could give rise 
to conglomerate effects in relation to the combination of the Targets’  current 
activities with its future a utomated driving technologies, brake -by-wire and 
electrical/electronic vehicle architecture and has reached the conclusion that it will 
not raise serious doubts in this regard for the following reasons.  
(431)  Out of the product groups mentioned in paragraph (420) , the Commission focused its 
analysis on the products where the Parties’ combined market share exceeds 30%.  
The Commission notes that a 30% market share is exceeded only when considering 
the component for use o nly in motorcycles.445 
(a) Brake parts: upstream market share above 30% for brake master cylinders 
([50-60]% in a worldwide market ) and floating caliper s and brake pads (as an 
assembled product)  ([30-40]%% in the EEA and [50 -60]% in worldwide 
market) ,  
(b) Anti-vibration systems and components : upstream market share above 30% 
for shock absorbers ([50-60]% in a worldwide market) 
(c) ECU: upstream market share above 30%  ([30-40]% in a worldwide market)  
(432)  For ABS, the upstream market share remains below 30% both at EEA and 
worldwide level; therefore no conglomerate concerns arise for this product market. 
With respect to passenger cars, the Commission considers that the transaction does 
not give rise to horizontally affected markets and gives rise to only one vertically 
affected market. In view of this, it is unlikely that the transaction may lead 
conglomerate issues in relation to passenger cars.  
(433)  For the products where the upstream market share exceeds 30%, the Commission 
has found that no competition concerns  as a result of co nglomerate effects arise for 
the following reasons : 
4.6.4.1. No ability to foreclose  access to customers  
(434)  The Commission considers that the Integrated Company would not have the ability 
to bundle  or tie  and thereby foreclose access to customers to competing componen t 
manufacturers, for the following reasons. 
(435)  First , the Commission agrees with the argument of the Parties that the supply 
relationship between component manufacturers and OEMs make bundling and tying 
unlikely, as the OEMs specify the product  in their tenders , to which suppliers react 
by developing the product according to the OEM’s specifications . This was 
confirmed by a competitor for components in the market investigation who 
explained that “the supplier which produces components to its OEM customers has  
                                                 
444  Reply to question 5 of RFI 15.  
445  Reply to question 4 of RFI 7.  
 
105 for this purpose already incur red costs and acquired the expertise to develop and 
manufacture the said components based on the OEM's specifications and supply 
contract ”.446 Indeed, bundling/tying is currently not common practice in the 
motorcycle industry.447  
(436)  Second, as outlined in Section 4.5, even for the specific product where the Integrated 
Company’s market shares are high (notably brake master cylinders  and floating 
caliper s and brake pads (as an assembled prod uct), competitors are present which are 
as or more advanced in their develop ment  of automated driving technologies, brake -
by-wire and electrical/electronic vehicle architecture . As a competitor confirmed, 
“[t]his technical advancement is currently moving f orward for nearly all OEM’s on 
different timelines .”448 These companies could respond to bundle offers  and/or tied 
products , or offer unbundled products, depending on the respective customer 
demand.  
4.6.4.2. No incentive to foreclose access to customers 
(437)  The Commissio n considers that the Integrated Company would also not have the 
incentive to bundle /tie and thereby foreclose access to customers to competing 
component manufacturers, for the following reasons. 
(438)  First , in case the Integrated Company offered a bundle /tied p roduct , OEMs could 
easily switch to competing component suppliers which could either offer the same 
product  at a lower price, or separate components. The OEMs themselves have a large 
amount of buyer power and would be able to decide by themselves whether t o 
purchase multiple component parts together or separately.449 As the Notifying 
Parties confirmed, s witching is common in the industry.450 Switching suppliers most 
often occurs at the new model development stag e, rather than during mass 
production of an existi ng model ,451 which gives competitors time to adjust for 
production of different variants of a component. A majority of customers in the 
market investigation confirmed that supply contracts usually have the duration of the 
lifespan of a vehicle model.452 The Pa rties also gave examples of switching: f or 
instance, i n [Parties’ knowledge of customers switching supplier] .453 
(439)  Second, the market investigation also confirmed the argument of the Notifying 
Parties that OEMs usually multi -source motorcycle and automotive co mponents , as 
customers confirmed .454 Also a competitor noted that  it is possible  that Honda “ will 
keep a portion for competition in order to improve their internal cost 
competitiveness” .455 
                                                 
446  Non-confidentia l reply to question 7.1 of questionnaire to competitors.  
447  Reply to RFI of 16 July to a competitor . 
448  Reply to RFI of 16 July 2020 to a competitor.  
449  Reply to question 3 of RFI 6.  
450  Reply to question 1 of RFI 8.  
451  Reply to question 1 of RFI 8.  
452  Repl y to question 11 to customers and question.  
453  Reply to question 1 of RFI 8.  
454  Replies to question 6 of questionnaire to customers.  
455  Non-confidential reply to question 5.1 of questionnaire to competitors.  
 
106 4.6.4.3. Overall likely impact on effective competition  
(440)  The Commission consi ders that any foreclosure strategy  by the Integrated C ompany 
would not have a n impact on effective competition.  
(441)  First , there is a significant number of players in the downstream markets for 
passenger cars and motorcycles to which competing manufacturers can supply 
automotive and motorcycle components  (see Table 11 and Table 12 for passenger 
cars and Table 14 and Table 15 for motorcycles and EEA and worldwide level 
respectively).  
(442)  Second, Honda already purchases a large percentage of its needs from the Targets  
(see Table 9 and Table 35). In addition, most of the components which the Targets 
supply each account for a very small portion of the total cost of a finished  vehicle.456 
Therefore only a small fraction of the upstream output would be affected by any 
revenue decreases resulting  from a conglomerate customer foreclosure strategy.  
(443)  Finally , the Notifying Parties’ section 5.4. internal documents related to the 
Integrated Company do not reveal any suggestion of any tying or bundling strategy, 
nor did anyone in the market investigation suggest that such behaviour or attempts at 
such behaviour has taken place in the past. At  this stage it remains difficult to predict 
the development of the areas of automated driving, brake -by-wire and 
electrical/electronic vehicle architecture in terms of future market  shares and impact 
of the proposed transaction on competition. As mentioned above, none of these 
relevant technologies are currently supplied  by the Targets on a merchant market.  In 
any event , given the described characteristics o f the market for automotive and 
motorcycle components , the Commission considers that, overall, the Integrated 
Company would not have the ability or the incentives to foreclose customer access 
for the sale of components for use in motorcycles and/or passenger cars.  
4.6.5. Conclusion on conglomerate effects  
(444)  Taking into account the Notifying Parties’  arguments and the results of the market 
investigation, the Commission takes the view that, with respect of any of the Parties’ 
product categories and considered sub- segments thereof, the proposed transaction is 
unlikely to raise serious doubts as to its compatibility with the internal market as a 
result of conglomerate effects.  
                                                 
456  Reply to question 1 of RFI 11.  
 
107 5. CONCLUSION  
(445)  For the above reasons, the European Commission has decided not to oppose the 
notif ied 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 Regulation and Article 57 of the EEA Agreement.  
For the Commission  
 
 
(Signed)  
Margreth e VESTAGER  
Executive Vice -President