WRITTEN QUESTION E-2456/99

by Sergio Berlato (UEN) and Mauro Nobilia (UEN) to the Commission

(16 December 1999)

Subject: New Holland Case

The Antitrust Committee chaired by Commissioner Mario Monti has approved the acquisition of the American group Case, market leader in the production of agricultural machinery, by the Fiat New Holland group.

The Commission, recognizing that the new group's dominant position would be enhanced, has allegedly made the approval conditional on the group divesting itself of several product lines and plants situated in the United Kingdom, Germany, Austria and Italy.

The plant in Breganze is the only one in Italy to manufacture combine harvesters and in the past its market performance has been characterised by high quality and reliability at competitive prices; but as a result of restructuring by the Fiat New Holland multinational, despite the plant's profitability and its new premises, 1 000 jobs have been shed there over the past ten years.

Can the Commission say whether:

- the disinvestment required by the Antitrust Committee as an indispensable condition should be interpreted as the sale of the plants to competitors?

- the competition has already been identified and whether the Commission has the duty or power to control future agreements?

- the sale of the firms to rival concerns includes the transfer of their wealth and special features in terms of intellectual property, personnel, know-how and supply contracts?

- moreover, specific machines known as maize harvesting bars were designed, researched and manufactured entirely in the Italian factory in Breganze; they are now being manufactured in Poland in a factory purchased by New Holland. Does the Commission not believe that the special production features of these machines, not to mention the combine harvesters, of which New Holland in Breganze is the sole Italian manufacturer, should be safeguarded?

Answer given by Mr Monti on behalf of the Commission

(24 January 2000)

If the Commission in its assessment of a notified merger has serious doubts as to its compatibility with the common market, the companies can submit undertakings in order to eliminate the identified competition concerns. These undertakings can enable the Commission to declare the concentration compatible with the common market, (Articles 6(1) b, 6(2) and 8(2) of Council Regulation no 4064/89 of 21 December 1989 on the control of concentrations between undertakings(1), the merger Regulation).

In cases where the Commission clears the merger, subject to modifications, the Commission appoints, upon the parties' suggestion, an independent trustee. The role of the trustee includes ensuring that the divestment assets are maintained pursuant to good business practice until the sale of the divestment assets and the taking effect of the agreements and that the divestments will effectively take place within specific deadlines.

In the merger case New Holland/Case, New Holland proposed in order to obtain the Commission's clearance within six weeks, undertakings including the divestment of various ranges and brands of tractors, combine harvesters, Case large square balers and backhoe loaders. This implies the assignment of intellectual property rights, of assets and personnel used or engaged in the manufacture and/or research and development of the divested product as well as of supply contracts. Moreover, the undertakings contain an opening up of Case and/or New Holland's dealer networks in the European Economic Area for all of the products divested.

In particular regarding combine harvesters, New Holland proposed to divest the Laverda non-hillside harvesters to a third party. This divestment includes the assignment of all intellectual property rights and know-how including the rights to the Laverda brand name in and to New Holland's non-hillside Laverda combines and the assignment of all assets of the Laverda production plant at Breganze (Italy) and of personnel employed at the plant, as well as of supply contracts.

According to the decision of the Commission, New Holland is obliged to ensure that the divestments including the Laverda non-hillside harvesters, are maintained according to good business practices at their current level until they are sold to a third party.

(1) OJ L 395, 30.12.1989, whole text republished in OJ L 257, 21.9.1990.