2003/813/EC: Commission Decision of 21 March 2000 declaring a concentration compatible with the common market and the EEA Agreement (Case No IV/M.1636 - MMS/DASA/Astrium) (notified under document number C(2000) 693) (Text with EEA relevance)
Date: 2000-03-21
Institutions: European Commission
Subjects: economic concentration, launch vehicle, merger control, satellite

28.11.2003

EN

Official Journal of the European Union

L 314/1

II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 21 March 2000

declaring a concentration compatible with the common market and the EEA Agreement

(Case No IV/M.1636 – MMS/DASA/Astrium)

(notified under document number C(2000) 693)

(Only the English text is authentic)

(Text with EEA relevance)

(2003/813/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community,

(DDRH), acquire joint control of Astrium, a newly
created company active in the space sector, to which all
of MMS's and most of DASA's activities relative to space
systems will be transferred.

Having regard to the Agreement on the European Economic
Area, and in particular Article 57 thereof,

(2)

Having regard to Council Regulation (EEC) No 4064/89 of
21 December 1989 on the control of concentrations between
undertakings (1), as last amended by Council Regulation (EC)
No 1310/97 (2), and in particular Article 8(2) thereof,

Having regard to the Commission decision of 3 December
1999 to initiate proceedings in this case,

Having regard to the opinion of the Advisory Committee on
Concentrations (3),

Whereas:

(1)

the Commission received a
On 29 October 1999,
notification of a proposed concentration pursuant
to
Article 4 of Council Regulation (EEC) No 4064/89 (the
Merger Regulation) by which Matra Marconi Space NV
(MMS) and DaimlerChrysler Aerospace AG (DASA), via
its subsidiary DASA Dornier Raumfahrt Holding GmbH

(1) OJ L 395, 30.12.1989, p. 1; corrigendum: OJ L 257, 21.9.1990,

p. 13.

(2) OJ L 180, 9.7.1997, p. 1.
(3) OJ C 285, 28.11.2003.

(3)

(4)

By decision dated 3 December 1999, the Commission
found that the notified operation raised serious doubts
as to its compatibility with the common market. The
Commission accordingly initiated proceedings in this
case pursuant
the Merger
Regulation.

to Article 6(1)(c) of

I. THE PARTIES AND THE OPERATION

MMS is jointly controlled by Matra Hautes Technologies
SAS (MHT) and by Marconi Electronic Systems Limited
(Marconi). The principal activities of MMS are the
manufacture and supply of space systems,
including
satellites and their payloads, subsystems for launchers
and manned space flight vehicles, ground stations and
various subsystems and technologies.

MHT is part of Aérospatiale-Matra, a French company
and military
primarily
aerospace,
and
weapons,
telecommunications. In the space sector, and in addition
to its stake in MMS, Aérospatiale-Matra owns, notably,

engaged
guided

information

commercial

in

L 314/2

EN

Official Journal of the European Union

28.11.2003

infrastructure

controlling interests in companies active in launchers,
space
equipment.
and
Aérospatiale-Matra is controlled by the French State and
Lagardère, a French group also active in the automotive
and media sectors.

spacecraft

reach an
MMS and DASA,
agreement on the major decisions concerning the
strategic commercial behaviour of Astrium.

the parties must

as

Marconi,
formerly owned by the General Electric
Company (GEC), has been merged with and into British
Aerospace plc, now renamed BAe Systems plc (BAe
Systems). BAe Systems is a group based in the United
Kingdom, which primarily operates in commercial and
military aircraft, guided weapons, marine engineering
and naval architecture and defence electronics. In the
space sector, and in addition to its stake in MMS, BAe
Systems owns controlling interests in a number of
companies active in spacecraft equipment.

(9)

Astrium will furthermore perform on a lasting basis all
the functions of an autonomous economic entity, as it
will combine all of MMS's activities and most of DASA's
space activities, and will therefore have access to the
necessary assets, personnel, manufacturing facilities and
commercial and service networks in order to conduct
on a lasting basis its business activities.

(10)

In the light of the above, it is clear that the proposed
transaction is a concentration within the meaning of
Article 3(1)(b) of the Merger Regulation.

DDRH is exclusively controlled by DASA, a German
company which combines the activities of the Aviation
the DaimlerChrysler
and Space Systems Division of
group.
In the space sector, and in addition to the
activities that will be contributed to Astrium, DASA
owns,
in particular, controlling interests in Eurockot
Launch Services GmbH, which operates in the field of
launch services. DASA belongs to the DaimlerChrysler
group, which also operates
in the automotive and
service sectors.

(11)

Pursuant to a shareholders' agreement, Astrium will be a
50:50 joint venture of MMS and DDRH. Astrium will
combine all of MMS's activities (supply of space systems
and subsystems) and all the DASA activities currently
performed in its subsidiary Dornier Satellitensysteme
GmbH (supply of satellite systems and subsystems) and
its division Raumfahrt-Infrastruktur
(supply of space
infrastructure and launchers). Astrium will be managed
as one single multinational entity with cross-border
business divisions, and it will mainly operate through
three legal entities located in France, Germany and the
United Kingdom.

II. CONCENTRATION

four members,

Astrium will be jointly controlled by MMS and DASA
(hereafter collectively designated as ‘the parties'). A
management board consisting of
two
proposed by each of the parties, will be appointed by
unanimous vote of the shareholders. All major decisions
relating to the commercial policy and strategy of
Astrium, such as the mid-term plan (equivalent to the
business plan), the annual budget and the appointment
and removal of legal representatives of the operational
companies, require the unanimous approval of MMS
and DASA. This confers joint control of Astrium to

III. COMMUNITY DIMENSION

in 1998 and each of

the
The combined aggregate worldwide turnover of
to the concentration exceeded EUR 5 000
parties
million (4)
the undertakings
concerned had a Community-wide turnover of more
than EUR 250 million. The undertakings concerned did
not each achieve more than twothirds of their aggregate
turnover within one and the same Member State. The
notified
Community
therefore
dimension within the meaning of Article 1(2) of the
Merger Regulation. It does not constitute a cooperation
case under the EEA Agreement.

operation

has

a

IV. COMPATIBILITY WITH THE COMMON MARKET

(12) Astrium will be active in the manufacture and supply of
space systems and their subsystems and equipment. As
indicated in previous Commission decisions (5), space
systems generally comprise two main segments: a space
segment (satellite, orbital platform, launcher and so on),
and a ground segment, which either commands and
controls the space segment (orbit, mission parameters
and so on) or provides
(such as
transmission of voice and data signals) with the space
segment. The space segment can be further categorised
into satellites, space infrastructure and launchers.

an interface

(4) Turnover calculated in accordance with Article 5(1) of the Merger
Regulation and the Commission Notice on the calculation of
turnover (OJ C 66, 2.3.1998, p. 25). To the extent that figures
include turnover for the period before 1 January 1999, they are
calculated on the basis of average ecu exchange rates and translated
into euro on a one-for-one basis.

(5) See, e.g. Case IV/M.437 — Matra Marconi Space/British Aerospace
Space Systems (OJ C 245, 1.9.1994, p. 9) or Case IV/M. 1185 —
Alcatel/Thomson-CSF-SCS (OJ C 272, 1.9.1998, p. 5).

(5)

(6)

(7)

(8)

28.11.2003

EN

Official Journal of the European Union

L 314/3

(13)

The concentration does not raise competition concerns
in the markets for civilian communication satellites,
satellite ground segments and launch services.

and is designed to perform the particular
which the satellite was put in orbit.

tasks for

(14)

Both parties are active in observation and scientific
space infrastructure and launcher
satellites, probes,
equipment, and the Commission,
in its decision of
3 December 1999 pursuant to Article 6(1)(c) of the
Merger Regulation, had expressed serious doubts about
In that decision, the Commission had
these markets.
the markets for
also expressed serious doubts about
systems
launchers.
for
products
However, there are, for the reasons indicated in sections
A to C below, no competition concerns about these
markets.

equipment

and

(18)

(15)

Finally, the parties are also active in certain satellite
equipment products and military satellites, and there are
strong indications that the operation would create or
strengthen a dominant position in:

— mechanical wheels

for

satellites

in Europe (6)

(Section A),

— military

communication

satellites

in

France

(Section C).

(19)

A. SATELLITES

RELEVANT PRODUCT MARKETS

The prime contracting level

(16)

(17)

Satellites are complex spacecraft orbiting or revolving
around a celestial object. As was indicated in previous
Commission decisions (7), four main categories can be
satellites, navigation
distinguished:
satellites and
satellites, observation (remote sensing)
scientific satellites. Satellites can be utilised for civilian
as well as military applications.

communications

Broadly speaking, a standard satellite consists of two
basic parts: the platform and the payload. The platform
(or bus)
is the physical structure of the satellite that
ensures its stability and thermal control, while the
payload governs the main parameters of the platform

(6) For the purpose of this decision,

‘Europe' means the EEA and
Switzerland (and therefore includes all the Member States of the
European Space Agency).

(7) See Case IV/M.1185 — Alcatel/Thomson-CSF-SCS: footnote 5.

(20)

(21)

satellites

comprising

such as NASA,

The satellite sector is often categorised as a commercial
segment,
(essentially
those
communication satellites) sold to commercial operators,
and an institutional segment (essentially consisting of
observation and scientific satellites) essentially sold to
the French Centre
space agencies
National d'Etudes Spatiales (CNES) or
the European
Space Agency (ESA). Commercial operators usually
source satellites based on proven designs, and procure
these
competitive bidding
satellites
institutional customers often
procedures. Conversely,
purchase
and
competition is usually restricted to domestic satellite
prime contractors. More especially, in the case of ESA,
procurement
to a geographic ‘juste retour'
principle requiring a balance between the financial
contribution of Member States to the ESA and the
industrial share of business awarded to manufacturers of
these Member States.

(often tailor-made)

through global

is subject

satellites,

specific

skills and do not address

The parties submit that a distinction should be made
between communication satellites and observation and
scientific satellites, because they do not involve the same
the same
technological
customers. This view has been widely endorsed by the
results of
further
confirmed by the fact
for the reasons detailed
above,
the conditions of competition are different
between the commercial and the institutional segments.
It therefore appears that communication satellites, on
the one hand, and observation and scientific satellites,
on the other hand, belong to different product markets.

the Commission enquiry, and is

that,

this case,

For the purpose of
is not necessary to
delineate the relevant product markets for navigation
satellites, as this segment is still at an early development
stage in Europe and because neither of
the parties
manufacture such satellites.

it

an

include

parties,

communication satellites

Commercial
either
Geosynchronous Earth Orbit (GEO), medium earth orbit
(MEO) or Low Earth Orbit (LEO) satellites. According to
the
the
communication
of
multimedia communication satellites, particularly LEO
satellite constellations (such as Iridium and Globalstar)
financed and operated by private consortia. In an earlier
decision (8), the Commission drew a distinction between

development
the

in
introduction

important
is

segment

(8) See Case IV/35.518 — Iridium (OJ L 16, 18.1.1997, p. 87).

L 314/4

EN

Official Journal of the European Union

28.11.2003

(22)

(23)

GEO and MEO/LEO satellites on the basis of cost,
function and other factors. However, for the purpose of
it is not necessary to delineate further the
this case,
relevant
commercial
markets
communications satellites as in all alternative market
definitions considered, effective competition would not
be significantly impeded in the EEA or any substantial
part of that area.

product

for

space

probes

Institutional customers (primarily the space agencies)
essentially procure observation and scientific satellites
and
for
(scientific
exploration of the solar system and beyond). These are
tailor-made products designed to perform
usually
alia meteorology,
specific missions,
cartography, astronomy, study of solar winds, etc.

including inter

vehicles

space

the

and

that

submit

(hereafter

space probes

that observation and scientific
The parties
satellites
collectively
designated ‘institutional satellites') can be combined into
a single product market. This view is supported by the
fact
there appears to be substantial supply-side
substitutability between these product categories, as
European-based satellite prime contractors are usually
active in all segments; and also by the fact that the
conditions of competition within institutional markets
are essentially similar, with all products being purchased
through
by
similar
and
there appears to
procurement processes. Conversely,
emerge a specific commercial market for observation
satellites, and,
there
appears to be no demand-side substitutability between
the various product
the
purposes of this decision, it is not necessary to delineate
further
civil
the
institutional
alternative market
definitions considered, effective competition would not
be significantly impeded in the EEA or any substantial
part of that area.

for the reasons indicated above,

categories. However,

relevant
satellites

product markets

customers

in all

same

for

for

as,

(24)

Communication and observation satellites may be used
for civil or military applications. It appears from the
the Commission investigation that military
results of
satellites usually use the same platforms as civilian
satellites, but
require specific adaptations related to
satellite integrity, data protection, and so on. There are
also indications that the conditions of competition are
different, between military and civil applications, since,
in particular, governments may seek to restrict military
expenditures to national suppliers. Consequently,
the
the Commission enquiry appear to be in
results of
for military
favour of
applications.

distinct product markets

The equipment level

its

(25) As was indicated in recital 17, a standard satellite
essentially consists of a platform and a payload. The
platform is the physical structure of the satellite, and
typically ensures
stability and thermal control,
maintains its orbit, and supplies electrical energy. The
payload governs the main parameters of the platform
and is designed to perform the particular
tasks for
which the satellite was put in orbit. As a result, the
same platform may be used for several applications,
while the payload is usually specific to the mission to be
carried out by the satellite.

(26)

(27)

(28)

(29)

the platform, or

in turn
Both the platform and the payload are
composed of
(such as
subsystems
a number of
propulsion units or attitude and orbit control systems
for
the
payload) and equipment (such as earth and star sensors,
solar generators, and antennae).
It appears from the
results of the Commission enquiry that each of these
products might constitute a distinct product market.

the main instruments for

the stabilisation of

there would appear

In particular,
to be a distinct
product market for mechanical wheels, which are used
the satellite attitude. This is
for
because, although other equipment products (namely
propulsion systems and magnetic wheels) may be used
for the same purpose, none of them would appear to be
substitutable for mechanical wheels.

the

use

their

satellite

attitude,

First, although propulsion systems can be used to
implies
control
consuming the fuel stored in the satellite. Given that
limited quantities of fuels are available in the satellite,
and that mechanical and magnetic wheels rely instead
on the electricity produced in sufficient quantities by the
solar generators, propulsion systems are in practice only
adapted to very short lifetime systems (less than one
year) and are therefore rarely used. Propulsion systems
are also based on very different
technologies and
know-how from mechanical and magnetic wheels, and
usually are not produced by the same manufacturers.

Secondly, although magnetic and mechanical wheels
function on the same basic principles,
it appears that
magnetic wheels have substantially higher performance
and costs than mechanical wheels, and therefore are
those applications (for example,
essentially used for
observation satellites) which require very accurate
attitude control. Magnetic and mechanical wheels also
rely upon different technologies and know-how, and, in
same
Europe,
manufacturers.

often not produced

the

are

by

28.11.2003

EN

Official Journal of the European Union

L 314/5

(30) Overall,

in the light of the results of the Commission
there appears to be a distinct product

investigation,
market for mechanical wheels.

still

they

which responded to the Commission enquiry indicated
for
that
considered
for
communication
can
communication satellites
for
therefore
be
for
communication
communication satellites are worldwide.

the markets
components
It
the markets
components

concluded
satellites

to be worldwide.

that
and

satellites

and

RELEVANT GEOGRAPHIC MARKETS

Commercial communication satellites

Civil institutional satellites

(31)

In previous Commission decisions (9), the markets for
communication satellites and communication satellite
equipment were considered to be global, as commercial
customers purchase
these products without being
subjected to geographic considerations. The parties
the conditions of competition in the
submit
sufficiently
communication
homogeneous
to be
considered worldwide, as customers request quotations
from, and place orders with, a variety of suppliers in
Europe and the USA.

geographic market

satellite
the

sector

that

are

for

space

components

(32) As was stated in the Aérospatiale/Matra (10) decision of
28 April 1999,
and
satellites,
subsystems produced by USA-based companies are
subject to an export licence arrangement managed by
the Department of Defense in the USA. A recent change
in the USA International Traffic in Arms Regulation
(ITAR) has
system,
transferring the export of commercial communication
satellites and equipment back to the jurisdiction of the
of
Department
Commerce.
this
change can affect
the conditions of competition for
commercial satellites.

from the Department
is necessary to examine whether

changed

licence

export

State

this

of

It

(33)

the

Some of
third parties which replied to the
Commission enquiry expressed some concerns that this
amounted to a tougher export licence system, which
might cause delays in the supply of satellite components
from the USA and might therefore make it more risky
and difficult for non-US prime contractors to use such
components. Others indicated that a tougher export
licence system might also make it more difficult for
European suppliers to offer certain components to US
customers, because the specifications of the products to
be procured by USA-based prime contractors might not
easily be made available to non-US equipment suppliers.

(34) However, on balance, it appears at this stage that such a
change cannot be considered an effective barrier
to
trade between Europe and the USA (except for certain
sensitive technologies), and most of the third parties

(9) See Case IV/M.437 – Matra Marconi Space/British Aerospace Space

Systems: footnote 5.

(10) See Case IV/M.1309 – Matra/Aérospatiale.

(35) As was indicated in recital 22, observation and scientific
satellites and space probes are primarily purchased by
space agencies, and competition is usually restricted to
domestic satellite prime contractors.

(36)

(37)

(38)

is

subject

the ESA, procurement of
Especially,
in the case of
satellites and equipment products
to a
geographic ‘juste retour' principle enshrined in the ESA
Convention requiring ESA (i) ‘to grant preference to the
fullest extent possible to industry in all [ESA] Member
States', and (ii) ‘to ensure that all [ESA] Member States
participate in an equitable manner, having regard to
their financial contribution'. It follows that there appears
to be a European market for observation and scientific
satellites and space probes, as well as for the related
equipment markets (including mechanical wheels).

There might also be national markets for observation
and scientific satellites and space probes
in those
Member States where national space agencies apply
similar procurement procedures at the prime contractor
level. And there might also be a worldwide market for
observation satellites sold to commercial operators or to
institutional customers where a domestic producer does
not exist (as in Asia), as these customers seem to obtain
these systems through global competitive procurement.
it is not
However, for the purposes of this decision,
necessary to delineate further these geographic markets
nor those for the satellite equipment products, because,
in the case of national or worldwide markets, effective
competition would not be significantly impeded in the
EEA or any substantial part of that area.

Military satellites

as

(such

programmes

Finally, the parties submit that the geographic markets
in
for military satellites are at least EEA-wide, owing,
particular, to a development of European bilateral and
multilateral
the military
reconnaissance satellite Helios 1, involving France, Italy
and Spain). Similarly,
it appears that certain Member
open
States
competitive processes involving prime contractors in
Europe
in
communication satellites, Hughes seems to have been
engaged in all competitions for the Spanish Hispasat I
satellites, while Lockheed Martin participates in the

and the United States:

procure military

instance,

satellites

through

for

L 314/6

EN

Official Journal of the European Union

28.11.2003

competition for
satellite.

the supply of

the UK Skynet 5B

(43)

In particular,

(39) However, on the other hand, certain Member States
would appear to continue sourcing military satellites
from domestic producers.
the French
Ministry of Defence (MOD) indicated that it procured
military satellites through open competition between
MMS and Alcatel Space Industries (Alcatel Space). Given
that the conditions of competition would be restricted
to domestic prime contractors, there appears still to be
a national geographic market in France for the supply of
military satellites.

(44)

(40) As

the

far as

the equipment

for military satellites

is
concerned, it appears that there is no strict ‘juste retour'
rule (except for some specific and critical products). In
same
particular, military satellites usually use
platform as civilian satellites, and platform products
procured by the prime contractor may be purchased
from the same suppliers as for civilian applications.
Therefore, depending on the equipment concerned, the
geographic markets
for military satellite equipment
to be either national or worldwide.
would appear
However, for the purposes of this decision,
it is not
necessary to delineate further these geographic markets
because, in all alternative geographic market definitions
considered,
be
significantly impeded in the EEA or any substantial part
of that area.

competition would

effective

not

it appears that the notified
In the light of the above,
operation does not create or strengthen a dominant
position in communication satellites and equipment, as
a result of which effective competition would be
significantly impeded in the EEA or any substantial part
of that area.

COMPETITIVE ASSESSMENT FOR INSTITUTIONAL
SATELLITES

space

agencies

Both MMS and DASA are active as prime contractors
for observation and scientific satellites and probes sold
to national
and ESA in Europe.
Aérospatiale-Matra, MMS and DASA also produce
certain equipment for those systems, including chemical
thrusters (used in chemical propulsion systems), solar
arrays (used in solar generators), mechanical wheels and
earth and sun sensors.

(45)

therefore lead to a horizontal
The operation will
integration at
the prime contractor level, and to a
vertical integration between the prime contractor level
and the parties' and Aérospatiale-Matra's activities at the
equipment level.

COMPETITIVE ASSESSMENT FOR COMMERCIAL
COMMUNICATION SATELLITES

Market characteristics

(41)

(42)

There are no overlaps between the parties'
(and their
parent companies') activities in communication satellites,
whether at the prime contractor level (where only MMS
is active) or at
(where all of
Aérospatiale-Matra, MMS and DASA are active, but each
sells different equipment). However, the operation will
result in a vertical integration between MMS's activities
at the prime contractor level, and DASA's activities at
the equipment level.

the equipment

level

competing

equipment

the
Some third-party suppliers have indicated that
the operation could lead to a
vertical aspects of
foreclosure of
suppliers or
competing prime contractors. However, at the prime
contractor level, MMS's average market shares (in value)
between 1994 and 1998 do not exceed [10-15 %] (*),
and Astrium will remain subject
to the competition
from other large manufacturers, especially USA-based
Hughes, Loral and Lockheed Martin; and, at
the
equipment level, DASA's average market shares during
exceed [20-30 %]*
the 1995-1997 period do not
worldwide on any satellite equipment market.

(*) Parts of

this text have been edited to ensure that confidential
information is not disclosed; those parts are enclosed in square
brackets.

(46) Observation and scientific satellites and space probes are
usually designed, developed, produced and launched in
the context of phased projects, where competition takes
place at certain steps. Institutional satellites are therefore
bidding markets, and competition in these markets is
determined by the presence of bidders with a capacity
to offer credible alternatives to the parties' products.

(47) Another important characteristic of

these markets is
that, as was indicated in recital 36, ESA procurement is
subject to a geographic ‘juste retour' principle. Broadly
speaking, this principle requires ESA (i) preferably to
procure from companies in ESA Member States, and ii)
to strike a balance between the financial contribution of
Member States of ESA and the industrial share of
business awarded to manufacturers of
those Member
States.

(48)

for

each

allowed

in the case of

is
instance,

Some
flexibility
individual
programme. For
scientific
the ‘juste retour' principle is
satellites and probes,
applied on the basis of three-year periods: this means
that each satellite or mission within this period need
not be entirely geographically balanced, as long as a
the end of each
minimum return is achieved at
three-year period. Similarly, in the case of observation

28.11.2003

EN

Official Journal of the European Union

L 314/7

satellites, although ‘juste retour' targets are set for each
mission, the actual return contained in the industrial
offers can deviate by up to 20 % from the initial targets.

Impact of the operation at the prime-contractor level
in Europe

(49) However, overall, this flexibility is limited in so far as
any imbalances will have to be offset and that, over a
certain period of time, average national industrial shares
will have to follow the ‘juste retour' contributions of the
Member States concerned.

(54) Given the small number of observation and scientific
satellites and probes launched each year in Europe,
market shares calculated over a short period of time
may not adequately reflect the actual market positions
of the competing prime contractors. For this reason,
average market
(in terms of value) were
shares
calculated over the 1994 to 1998 period.

Market players

It is generally recognised that only four companies in
Europe can compete for the prime contracting of large
or
complex satellites: MMS, DASA, Alcatel Space
Industries (Alcatel Space, a French company whose
capital is shared between Alcatel, a telecommunication
equipment group, and Thomson-CSF, a defence and
professional electronics group), and Alenia Aerospazio
company
(Alenia,
the
an
Finmeccanica
smaller projects, other
For
possible prime contractors include Kayser-Threde, OHB
Systems, and SSTL. At worldwide level, there remain a
number of major competitors, such as the USA-based
companies TRW, Lockheed, and Ball Aerospace.

Italian
group).

belonging

to

(55) On that basis, Astrium will clearly be the leading prime
contractor for institutional satellites. In terms of value,
Astrium's members accounted for [45-55 %]* of sales of
institutional satellites between 1994 and 1998 (MMS:
[25-35 %]*, and DASA:
largest
competitors being Alcatel Space [30-35 %]* and Alenia
Aerospazio [5-10 %]*.

[15-25 %]*),

the next

Alenia will be an effective competitor, albeit for a
limited number of projects

Impact of the operation in possible national or
worldwide markets

(56)

level

there were national markets at prime-contractor
If
and/or equipment
for observation and scientific
satellites in those Member States where national space
agencies procure institutional satellites on a national
basis, the operation would create no overlaps, as DASA
and MMS are not active in the same Member States. For
the same reasons, vertical integration arising from the
operation would not raise competition concerns either.

It appears from the Commission investigation that there
is a limit to the number of ESA projects where Alenia
can act as a prime contractor. This is because the
average Italian contribution (12 %) to ESA institutional
satellite programmes is much lower
than the usual
workshare (20-25 %) attributed to a prime contractor,
and because the ‘juste retour' principle requires that the
the
return be
national
contribution to the relevant programme. Although
actual returns (and thus Alenia's capacity to compete at
the prime contractor level) may fluctuate from one
mission to another and may deviate from the return
the overriding conclusion is that Alenia will
targets,
at
have only
the
prime-contractor
satellite
missions.

to compete
for ESA institutional

in line with

industrial

capacity

limited

level

Similarly, if there were world markets for the supply of
to
observation satellites to commercial operators or
institutional customers where a domestic producer does
not exist,
(in terms of
volumes ordered) would not exceed [25-35 %]*, and
they would remain subject
to the competition from
other large satellite prime contractors including TRW
[60-70 %]*.

the parties' market

shares

for

institutional

In the light of the above, as far as national or worldwide
markets
it
appears that the notified operation does not create or
strengthen a dominant position as a result of which
effective competition would be significantly impeded in
the EEA or any substantial part of that area.

satellites are concerned,

successfully

(57) However, it also appears that Alenia will still be able to
a number of European
for
compete
institutional satellites. This is because Alenia will still be
able to perform both major tasks (such as payload or
platform integration)
satellite
programmes, and also to act as a prime contractor for
Italian programmes (placed under the aegis of the Italian
space agency). These activities appear to be sufficient for
Alenia to maintain its competitiveness and to stay in the
market, as is further indicated by the fact that Alenia
was awarded the prime contracting of the ESA science
satellite Integral (to be launched in 2001).

for ESA institutional

(50)

(51)

(52)

(53)

L 314/8

EN

Official Journal of the European Union

28.11.2003

Alcatel Space will be an effective competitor to
Astrium for most projects

(58)

In the light of the above, competition will essentially be
between Alcatel Space and Astrium, but Alenia will still
be able to compete as a prime contractor for certain
ESA programmes.

(62)

(63)

(64)

contractor

It also appears that Alcatel Space has the capacity to be
an effective competitor to Astrium: first, Alcatel Space
currently has the necessary core abilities to act as a
prime
satellite; and
every kind of
secondly,
this capacity will not be restricted by the
application of the ‘juste retour' principle, as the French
contribution to ESA institutional satellites programmes
(approximately 23 %) is close to the average workshare
performed by a prime contractor.

for

No possibility of raising rivals' costs through the
‘juste retour' rule

in Germany

It has been argued that Astrium might be in a position
to raise substantially its rivals' costs for ESA institutional
programmes. This reasoning is based on the grounds (i)
that in view of the ‘juste retour' principle, a certain
proportion of each contract value will have to be
carried out
and the UK (together
approximately 29 %); (ii) that Astrium's position in these
Member States would be such as to make other prime
contractors dependent on contributions from Astrium
for these German and British returns; and (iii)
that
Astrium could raise its prices for these contributions,
thereby
offers
non-competitive or forcing its rivals' margins down to
such an extent as to make these offers non-viable.

either making

competitors'

its

(59)

(60)

(61)

more than 20 % of the total contract value. It follows
that,
in such cases, Astrium would depend more on
Alenia than Alenia would depend on Astrium, and
Astrium would therefore not be in a position to raise
Alenia's costs.

The situation might be different for Alcatel Space. This
is because Alcatel Space will have to source a certain
share of the German and British returns from Astrium,
while Astrium will subject to the same constraints to a
much lesser extent, since it can source the French return
internally (through the former MMS-France). However,
overall, the argument that Astrium could substantially
raise Alcatel Space's costs has to be rejected in this
present case.

First, it should be noted that, in view of the ‘juste retour'
rule and the substantial presence of Alcatel Space in
certain ESA Member States (such as Belgium, Spain,
Denmark or Norway), Astrium will also have to seek a
contribution from Alcatel Space. This will also make
Astrium dependent on Alcatel Space for a certain share
of its contracts, and will therefore reduce the scope for
Astrium to increase its rivals' costs (as Alcatel Space
could also raise Astrium's costs, albeit to a lesser extent).

satellites

to assess,

although institutional

Secondly,
are often
tailor-made contracts where overall prices may be
it appears that ESA has sufficient
difficult
experience and control over the breakdown of prices, as
well as cost assessment models, to detect any substantial
price rise. This capacity is further enhanced by the fact
that, as was indicated in recital 46, ESA missions are
carried out in the context of phased projects, where
price estimates are provided at successive steps of the
the ESA would also have
process.
sufficient countervailing buying power
to be in a
position to force prices down. This would further
restrict Astrium's capacity to raise its prices for the
German and British contributions and thus raise Alcatel
Space's costs.

In such a case,

first,

(20-25 %).

In those cases,

There is no indication that Astrium would be in a
position effectively to raise Alenia's costs through this
in those cases
mechanism. This is so because,
where Alenia would compete at the prime-contractor
level, its share (and thus the Italian return) would match
or even exceed the workshare allocated to a prime
contractor
the
Italian contribution would exceed the average share of
12 % to be reached overall. Given that the parties are
not active in Italy and would depend on Alenia for most
of the Italian return, this implies that the parties would
depend on a contribution from Alenia for most of the
20-25 %. On the other hand, Alenia would be able to
source the French return from Alcatel Space; and Alenia
would also be able to source a certain proportion of the
British
from certain
third-party suppliers in those Member States. Altogether,
Alenia would therefore not depend upon Astrium for

and German

contributions

therefore,

(65) Overall,

it appears from calculations based upon the
the Commission
course of
data provided in the
investigation that, were Astrium in a capacity to raise
Alcatel Space's costs, any possible rise would have
limited effects (about 2-3 % of the total contract value).
This would be unlikely substantially to undermine
Alcatel Space's competitiveness, and, given that a prime
contractor's margin usually reaches […]* of the total
contract value, a price rise of
this type could be
compensated by Alcatel Space. Consequently, it appears
that Astrium will not be in a position substantially to
raise Alcatel Space's costs.

(66)

(67)

(68)

(69)

(70)

28.11.2003

EN

Official Journal of the European Union

L 314/9

No possibility of foreclosing the markets to other
prime contractors

(71)

It has also been argued that Astrium would be a major
supplier of certain equipment products (such as solar
array networks, mechanical wheels, chemical thrusters,
cryostats). To the extent that other prime contractors
need to source the equipment products from the open
it is therefore necessary to examine whether,
market,
after the operation, Astrium would be in a position to
shut out those competitors.

it appears that the notified
In the light of the above,
operation does not create or strengthen a dominant
position in institutional satellites at the prime-contractor
level
result of which effective
competition would be significantly impeded in the EEA
or any substantial part of that area.

in Europe

as

a

Impact of the operation at the equipment level in
Europe

It should be noted that Astrium will not be in a
position to restrict
to competing prime
supplies
contractors: given that the selection of suppliers often
takes place after that of the prime contractor, Astrium
would not appear to have any incentives to do so, as
any restriction of supply would have no repercussion on
the selection of the prime contractor and would instead
reduce Astrium's sales; and,
in any event, ESA would
probably detect and remedy any restriction of supplies
the main
on the part of Astrium.
potential
transaction would concern
Astrium's capacity to raise its rivals' costs through
higher equipment prices.

follows that

effect of

the

It

Firstly, however, it appears that most of the equipment
products concerned (such as
solar array networks,
chemical thrusters, cryostats and mechanical wheels (11)
are only produced within Astrium by DASA or MMS or
Aérospatiale-Matra). Given that both MMS and DASA
are also already active at the prime-contractor level, the
operation will not materially affect the conditions of
competition for these equipment products.

Secondly, some of
the products concerned (such as
cryostats) are actually not standard equipment products
to be fitted in all satellites, but
instead are highly
specific products
resulting from ESA technological
R & D programmes. For these products, it appears that
Astrium will not be in a position to shut out competing
prime contractors, as ESA may either require that the
results of
these technological R & D programmes be
made public to all tenderers or decide to purchase direct
the product concerned and deliver
to the prime
contractor selected.

it

Finally, there is no indication that Astrium could shut
out other prime contractors through any product where
there would be no alternative competitive supplier to
Astrium in Europe. This is because these products are
standard
price
conditions already prevail, and where the parties could
not substantially raise their prices without ESA detecting
and remedying the behaviour. And this is also because,
in any event, those products represent only a minor
share of the value of a satellite.

products where

equipment

usual

(11) See discussion in recitals 78 to 83.

(72) As was

some

indicated in recital 44, MMS, DASA and
Aérospatiale-Matra manufacture
equipment
products for institutional satellites (such as solar array
networks, mechanical wheels, chemical
thrusters or
cryostats). The operation will create no overlaps at the
equipment level, as the parties and Aérospatiale-Matra
do not supply similar products. However, the operation
will result in a vertical integration between the parties'
activities
satellite
equipment, and their activities on the downstream
markets for institutional satellites.

upstream markets

on the

for

(73)

It is therefore necessary to examine the impact of the
notified transaction at the equipment level. In particular,
some third-party suppliers have voiced concerns that
the merged entity (both a major customer and a
competitor to them) would be in a position to weaken
their competitive position,
for instance by favouring
in-house suppliers for those contracts where Astrium
would act as a prime-contractor, and/or by imposing
tougher contractual conditions on third-party suppliers.

(74)

(75)

Equipment other than mechanical wheels

These concerns may potentially relate to all equipment
the parties or their parent companies
which one of
currently produces and which the other party (or both
parties) also purchases from independent suppliers. Such
equipment includes mechanical wheels, solar generators,
earth and sun sensors, chemical propulsion equipment
thrusters) and so on.
(apogee boost motors,
tanks,
However, except
there is no
indication that the operation could create a dominant
position by the parties.

for mechanical wheels,

First, any attempt by Astrium to favour
in-house
suppliers would be seriously limited by the fact that,
according to ESA procurement rules, the selection of
suppliers
competition
monitored by ESA. Any favouring of in-house suppliers
would be
should the
the more difficult
prime-contractor wish to bid for any equipment, the
selection of the supplier of the equipment concerned

follows

usually

open

as,

an

all

L 314/10

EN

Official Journal of the European Union

28.11.2003

will usually be taken away from the prime-contractor
and instead is placed under the responsibility of an
evaluation panel appointed by ESA.

(82)

(76)

(77)

(78)

the products concerned are also
Secondly, most of
supplied by companies outside France, Germany and the
United Kingdom (where Astrium operates). Given the
application of
the ‘juste retour' rule governing ESA
procurement, which demands that a certain share of the
contract value be placed with suppliers within all
participating countries, Astrium's capacity to favour
in-house suppliers or
impose unjustified contractual
conditions would be seriously limited for the equipment
concerned.

that,

it appears

for most of

Finally,
the products
concerned, certain suppliers currently do not primarily
sell to MMS and DASA. These suppliers would therefore
remain competitive even if Astrium managed to favour
in-house suppliers. It is even likely that the competitive
stance of the suppliers will be further enhanced after
the operation, since competing prime-contractors (such
as Alcatel Space and Alenia) will probably prefer to
procure from independent suppliers.

In the light of the above, and taking into account the
combined effect of
the three elements as described
above, it appears that the notified operation does not
create or
strengthen a dominant position in the
from
European markets for satellite equipment apart
mechanical wheels, as a result of which effective
competition would be significantly impeded in the EEA
or any substantial part of that area.

Mechanical wheels

(79) At European level, only two producers of mechanical
wheels can be found: MMS, which does not
sell
mechanical wheels but uses them for its own purposes,
and Teldix, a German company which sells to most
European prime-contractors
customers
outside Europe).

(as well

as

Consequently, the Commission identified serious risks
that, after the operation, the parties could substantially
undermine the competitiveness of their only competitor
in the field of mechanical wheels. This would lead to the
creation of a dominant position in the
sales of
mechanical wheels in Europe, as a result of which
effective competition would be significantly impeded in
the EEA.

(83) When these concerns were communicated to the parties,
the parties offered a remedy which is laid out in detail
in the Annex. The remedy consists of MMS's divesting
(including
its mechanical wheels business
itself of
tangible assets, supply and sales contracts,
intellectual
property rights and personnel).

(84)

remedy will

eliminate MMS's

in
This
mechanical wheels. Consequently,
if
implemented, will remove the Commission's concerns
a
that
dominant position in the market for mechanical wheels
in Europe.

the proposed concentration would create

the undertaking,

activities

COMPETITIVE ASSESSMENT FOR MILITARY SATELLITES AND
EQUIPMENT

(85) Military satellites usually perform similar missions to
commercial or institutional satellites. They usually use
the same platforms as civilian satellites, but require
specific adaptations related to satellite integrity, data
protection, etc. Given this technical proximity, the low
sales volumes of military satellites and the presence of
substantial economies of scale in the space sector,
it
appears that being competitive at the prime-contractor
level for military satellites usually requires substantial
activities in the equivalent civil applications. This is
especially so in military communication satellites, which
are usually based on the same platforms as civil
products, and where, due to the use of ‘standardised'
solutions, economies of scale are particularly important.

(80)

(81)

Teldix achieves a substantial share of its sales through
the parties, and indicated that economies of scale were
important
it
appears that, should the merged entity decide to restrict
purchases from Teldix and instead source from MMS,
Teldix's competitiveness would be seriously undermined.

in mechanical wheels. Consequently,

(86)

It also appears that Teldix would not be substantially
protected by the ESA procurement rules (as most of
Teldix's sales are for communication satellites, where
ESA rules do not apply), nor by the application of the
a German
‘juste
company).

retour' principle

(Teldix

being

For the same reasons as those indicated above, there is
the operation could have adverse
no indication that
consequences on competition in military observation
and scientific satellites or on the open market
for
military communication satellites. There is also no
indication that the operation could create or strengthen
a dominant position at the equipment level. First, given
that MMS and DASA do not operate in the same
Member States, the operation will not materially alter
those products
the
conditions of
the
(essentially critical
those
geographic market

competition for
equipment products) where
is national. Secondly,

for

28.11.2003

EN

Official Journal of the European Union

L 314/11

equipment products where the geographic market
worldwide,
[20-30 %]*.

is
the parties' market shares do not exceed

(91) When these concerns were communicated to the parties,
the parties offered a remedy which is laid out in detail
in the Annex. The remedy consists of DASA's granting
non-exclusive licences for the manufacture and sale of
on-board management
systems, unified propulsion
systems and chemical thrusters.

the operation could create or

(87) However, the Commission has identified serious risks
that
strengthen a
dominant position for MMS on the French market for
military communication satellites, where procurement is
based on open competition between MMS and Alcatel
Space at the prime-contractor level.

(92)

(88)

(89)

a number of

In that market, Alcatel Space's current designs are based
on a standard platform called Spacebus 3000. DASA
supplies
subsystems and equipment
products for this platform, and in particular appears to
be the sole source of supply for on-board management
systems (12),
and
unified
chemical thrusters (14).

systems (13)

propulsion

It appears
from the Commission investigation that
finding an alternative source of supply for the above
products could be difficult for Alcatel Space (especially
in on-board management systems, which are not usually
sold on the open market but which are usually designed
directly by the prime-contractor as a part of its system
activities), and/or would involve significant additional
costs and delays. In the short term, Alcatel Space is
therefore dependent upon supplies by DASA for its
military communication satellites business.

to Alcatel Space,

(90) After the operation, the merged entity would therefore
become both a supplier and a competitor to Alcatel
Space. This would provide incentives for DASA to
its
restrict, raise the price or reduce the quality of
supplies
its
thereby weakening
competitive position and potentially foreclosing the
to Alcatel Space. Given that
prime-contracting level
Alcatel
the
Space
prime-contractor level
there would be no
in France,
alternative left to Astrium after the operation. There are
strong indications that this would lead to the creation of
communication
a
satellites
in France, as a result of which effective
competition would be significantly impeded in that
Member State.

dominant position in military

is MMS's only competitor

at

(12) The on-board management system includes software and hardware
for processing information concerning the satellite attitude and
orbit control system. It is an important part of the platform, and
is usually considered to be part of the core technologies necessary
for the prime-contractor to keep in order to remain competitive.
(13) The unified propulsion systems is the propulsion subsystem of a
satellite. It moves the satellite into orbit and is used to correct its
attitude and orbit during its lifetime. The propulsion subsystem is
in turn composed of a number of equipment products, including
motors, thrusters and tanks.

(14) Chemical thrusters are a part of the propulsion subsystem.

This remedy will permit the creation of an alternative
source of supply for the products concerned, and will
the transaction.
avoid the possible adverse effects of
Consequently,
implemented, will
remove the Commission's concerns that the proposed
concentration would create a dominant position in the
French market for military communication satellites.

this undertaking,

if

B. SPACE INFRASTRUCTURE

RELEVANT PRODUCT MARKETS

(93)

(94)

Space infrastructure comprises manned and unmanned
space systems which are used several times for different
mission purposes, mainly in the field of research under
space conditions (microgravity, vacuum, radiation) but
also for in-orbit applied technology and tests. Unlike
satellites, space infrastructure systems are not designed
for one specific mission but
successive
missions with the same basic systems, and in some
cases (such as manned space stations) must allow for a
space
human
infrastructure is mainly used for scientific purposes and
rarely has direct commercial applications, customers for
space infrastructure are essentially space agencies such
as NASA, ESA or European national agencies.

presence. Given

operating

several

that

for

Space infrastructure can be broken down into five main
(i) unmanned reusable/retrievable
product categories:
platforms (such as capsules for microgravity R & D); (ii)
manned or man-tended laboratories or habitats (such as
space stations); (iii) servicing systems (such as systems
used to supply space stations with equipment or
as
payload
consumables);
experimental facilities used for research activities under
space conditions and used within a space system); and
(v)
infrastructure
for manned planetary and interplanetary
elements
explorations, such as habitats, rovers and so on).

infrastructure

(such as

facilities

outpost

(such

(iv)

(95)

The parties submit that space infrastructure belongs to
product markets which have to be distinguished from
satellites, as space infrastructure, unlike satellites,
is
designed for repeated use, and therefore must allow for
maintenance or for special security requirements in the
case of manned space systems. This view has been

L 314/12

EN

Official Journal of the European Union

28.11.2003

widely confirmed by the results of
enquiry.

the Commission

COMPETITIVE ASSESSMENT

(96)

The parties also submit that there is no need to establish
a distinction between the above product categories,
since
as
able
prime-contractors in all of these segments.

all market

players

are

act

to

(97) However, while

it

that

appears

and the

(especially manned

the major
prime-contractors (e.g. MMS, DASA and Alenia) have
the capacity to be active in all product categories, the
results of the Commission investigation suggest that a
distinction should be made between the smaller product
categories (unmanned reusable/retrievable platforms and
payload facilities, with a total contract value usually
larger product
below EUR 50 million)
or man-tended
categories
laboratories or habitats, with a contract value often
so because
exceeding EUR 500 million). This
prime-contractors
product
categories (for example, Kayser-Threde, Carlo Gavazzi or
the
OHB system) may not have the capabilities or
the production of
financial
larger
their
concentrate
systems,
prime-contractor business
smaller product
categories. This
is also because the conditions of
competition seem to be different between larger
products and smaller products:
in particular, while
contractors of smaller infrastructure products appear to
be selected through open competitive procurement, the
elements
selection of prime-contractors of
appears to be largely based on national industrial policy
considerations.

resources necessary for
usually
and

is
smaller

in the

active

larger

the

in

or

through

national

and approved future

(101) Space infrastructure systems usually concern tailor-made
products developed and manufactured for highly specific
applications
international
programmes procured by space agencies. In practice, all
infrastructure
present
programmes by the ESA are related to the development
of the International Space Station (ISS) by the United
States of America, Russia, Europe, Japan, Canada and
Brazil. In particular, the ESA will procure the Columbus
orbital
for the ISS.
The first parts of the ISS were launched and assembled
in December 1998, and the station is expected to be
completed by 2005.

facility (a man-tended laboratory)

space

(102) Space

share

infrastructure markets

a number of
common features with institutional satellite markets.
First, as space infrastructure products are developed and
produced through phased projects procured by space
agencies, these are bidding markets, and competition is
determined by the presence of bidders with a capacity
to offer credible alternatives to the parties' products.
Secondly, like institutional satellites, space infrastructure
programmes are subject to the geographic ‘juste retour'
rule.

(98) However, for the purposes of this Decision,

it is not
necessary to delineate further
the relevant product
markets for space infrastructure, since, in all alternative
market definitions
competition
would not be significantly impeded in the EEA or any
substantial part of that area.

considered,

effective

RELEVANT GEOGRAPHIC MARKETS

(99) As was indicated in recital 93, the customers for space
infrastructure are space agencies, especially the ESA. The
systems
procurement of
and
equipment
to the ‘juste retour'
principle, and competition between suppliers of space
infrastructure systems is organised on the basis of
European-wide programmes.

space
is therefore subject

infrastructure

(100) Consequently,

it appears that

the markets for space
infrastructure are European. However, for the purpose
of this case, it is not necessary to delineate further the
relevant geographic markets for space infrastructure
because, even if the geographic markets were national,
effective competition would not be significantly impeded
in the EEA or any substantial part of that area.

(103) However, space infrastructure markets may also differ
from those for institutional satellites in a number of
ways. Firstly, it appears that the application of the ‘juste
retour' principle is less flexible than in institutional
satellites, and that national contributions may be much
higher than in institutional satellites (up to 59 % for the
Netherlands' contribution to the European robotic arm).
Overall,
for
that
prime-contractors in several Member Sates to compete
is more limited than in institutional satellites. This is
further confirmed by the fact that, according to the
results of
the role of
the Commission investigation,
competitive procurement
ISS development
programme was actually limited to feasibility studies,
smaller infrastructure elements and services.

this means

possibility

in the

the

(104) Furthermore,

it also appears that space infrastructure
programmes (especially larger products such as manned
habitats) are much fewer and larger (up to EUR 700
million)
than institutional satellite programmes. The
space infrastructure products to be manufactured or
developed within the foreseeable future will therefore
few existing or upcoming ESA
result
the
programmes,

competitive

impact of

from the

and the

28.11.2003

EN

Official Journal of the European Union

L 314/13

transaction therefore needs to be assessed in the context
of these programmes.

Larger space infrastructure systems

related to the

(105) MMS, Aérospatiale-Matra and DASA supply most of the
major European elements
ISS (for
instance, DASA is the overall prime-contractor for the
Columbus orbital facility). For these reasons, the parties
for
and Aérospatiale-Matra
[60-70 %]* of the value of European space infrastructure
programmes during the period from 1996 to 1998.
Other prime-contractors
(approximately
30 %), also capable of offering products in all categories,
and, to a lesser extent, Kayser Threde, OHB Systems,
Fokker Space and Carlo Gavazzi for smaller products
(mainly payload facilities).

are Alenia

collectively

accounted

and

in the

elements

infrastructure

(106) However, in the first place, it appears that the role of
competitive procurement
ISS development
programme was actually limited to feasibility studies,
smaller
In
particular, for the larger systems, the selection of the
prime-contractors seems to have been based on national
policy considerations and the
relation of new to
previous work rather than on open competition. In that
and
that
context,
Aérospatiale-Matra's combined shares of sales essentially
reflect the level of the French and German contributions
to the ISS development programme [65-75 %]*, rather
than highlight past competitive success.

services.

parties'

seems

the

it

(107)

(108)

larger

In the second place, the operation does not appear to
have any adverse consequences on existing programmes
space infrastructure products, where the
for
prime-contractors and suppliers have already been
selected and where the contractual conditions have
already been defined. The competitive impact of
the
operation therefore needs to be assessed in the context
of future products, to be developed through existing
development
forthcoming
development programmes within the foreseeable future.

programmes

and

to

the

distribution

forthcoming

programmes,
the

the operation will not affect

In the third place,
the
conditions of competition at the prime-contractor level
because,
European
for
of
ESA,
according
prime-contractor responsibilities for these programmes
is already predetermined. The larger space infrastructure
programmes likely to be ordered until 2005 concern the
exploitation of the ISS and the development of a crew
return vehicle. It appears that a consortium has been
formed for the ISS exploitation programme between the
major
prime-contractors
(Aérospatiale-Matra, DASA, MMS and Alenia), and that
these programmes are in effect a
other parts of
continuation of previous programmes.

development

ISS

(109) Finally, the operation would not seem to reduce the
ESA's choice for other possible programmes. This is
because, according to past practice, the selection of the
nationality of prime-contractors will probably be based
on
(and
Aérospatiale-Matra and MMS on the one hand, and
DASA on the other hand, are not incorporated in the
same Member States) and the relation of new to
previous work.

considerations

national

policy

(110)

In the light of the above,
it appears that the notified
operation does not create or strengthen a dominant
position on the markets for larger space infrastructure
systems as a result of which effective competition would
be significantly impeded in the EEA or any substantial
part of that area.

Smaller space infrastructure systems

(111) As was

to be different

from those for

indicated in recital 97,

the conditions of
competition for smaller space infrastructure systems
larger space
appear
infrastructure products, and in particular seem to rely
on open competition to a larger extent. Within these
systems, the operation will create overlaps in payload
facilities, where, according to the data provided by the
parties, the parties and Aérospatiale-Matra collectively
accounted for [35-45 %]* (in terms of volume) and
[55-65 %]* (in terms of value) of ESA development
contracts awarded since 1996.

(112) However, first, the operation does not appear to have an
adverse
the
impact on existing programmes,
industrial organisation and the contractual conditions
for these programmes have already been defined.

as

(113) Secondly,

to

for

those

products where

the parties will
from

the
future
application of the ‘juste retour' rule allows for some
remain
competition to take place,
bids
subject
other
competitive
([20-25 %]* of
including Alenia
prime-contractors,
contract volume, and [20-25 %]* of contract value) as
well as Carlo Gavazzi, OHB and Kayser-Threde. All of
those companies appear to have sufficient know-how
and capabilities to bid as prime-contractors for payload
facilities, and all of them have recently been awarded
prime contracts in this field.

(114)

it appears that the notified
In the light of the above,
operation does not create or strengthen a dominant
position on the markets for smaller space infrastructure
systems as a result of which effective competition would
be significantly impeded in the EEA or any substantial
part of that area.

L 314/14

EN

Official Journal of the European Union

28.11.2003

C. LAUNCHERS AND LAUNCH SERVICES

products are designed specifically for Ariane, and that
therefore there is no open market for them.

RELEVANT PRODUCT MARKETS

Launch services

(115) Space systems are carried into stable orbit

expendable

In general,

can be distinguished:

through
rocket-propelled multiple-stage launchers using liquid or
two types of
solid propulsion systems.
launchers
launch
vehicles (ELVs) which are consumed during the launch
process, and partially or fully reusable launchers (RLVs).
ELVs may also be categorised into three product groups,
depending on the payload mass that the launcher is able
to deliver in orbit: small
launchers can place up to
2 000 kg of payload into LEO; medium launchers can
place payloads with a weight between 2 000 kg and
6 000 kg into LEO and MEO; and heavy-lift launchers
can place payloads of more than 4 000 kg into GEO or
launch several small satellites into LEO.

(116)

distinguished

In the Astrolink decision (15) of 25 June 1999,
the
Commission concluded that commercial launches had to
from captive military or other
be
governmental
launches, which are ordinarily not
available for open competition, even though the vehicles
used are similar. The Commission also indicated that the
markets for commercial
launch services were likely to
correspond to worldwide markets, as commercial launch
awards are granted through global bidding processes.

(122)

(117) Some of

the

third parties which replied to the
Commission enquiry submitted that the launch services
performed respectively by the small
the
medium launchers and the large launchers constituted
distinct product markets. In particular, they stated that
launch services for GEO satellites required very powerful
launchers, with a weight between 500 and 800 tonnes.

launchers,

between

programmes

(120) Ariane launchers are developed through international
certain
(government-funded)
European States (the Ariane Member States). After the
initial R & D and feasibility studies, these programmes
essentially consist of a development phase and of a
subsequent production and launch phase where Ariane
rockets based on the qualified design provide launch
services. It was decided that the development phase for
these
the
responsibility of the ESA, which, for past programmes,
has delegated to the CNES the role of design authority;
it was also decided that the Ariane production phase as
well as
the Ariane
launchers would be entrusted to Arianespace SA, a
limited private company under French law.

the marketing and launch of

programmes would

placed

under

be

(121) Suppliers of

systems

and generally

and subsystems

for Ariane
launchers are usually selected during the development
phase,
the
production phase. Given that the development phase is
placed under
the
procurement process is therefore governed by the ‘juste
retour' principle, and the suppliers are selected at
European level.

remain unchanged for

responsibility of

the ESA,

the

for

critical

investments

character and the importance of

It appears from the Commission enquiry that, in view of
the
the specific
launcher
know-how and
components (such as engines), system integrators and
suppliers of certain subsystems are not selected through
competitive tendering procedures, but on the basis of
expertise, know-how, capabilities and in the light of the
the Ariane Member States.
financial contributions of
This suggests that there might be no open market at the
system level or for certain critical subsystems. However,
it also appears that competition may take place at the
It
equipment level as well as for certain subsystems.
follows that each of
the products procured through
competitive bidding procedures would appear to belong
to relevant product markets.

(118) However,

for

the purposes of
this case,
is not
the relevant product
necessary to delineate further
markets for launch services, as in all alternative market
definitions considered, effective competition would not
be significantly impeded in the EEA or any substantial
part of that area.

it

(123) However, for the purposes of this decision,

it is not
necessary to further delineate the relevant product
markets for systems and subsystems for
the Ariane
launchers, since,
in all alternative market definitions
be
considered,
significantly impeded in the EEA or any substantial part
of that area.

competition would

effective

not

Launcher systems, subsystems and equipment

(119) Aérospatiale-Matra, MMS and DASA are active in the
supply of systems (such as stages), subsystems (such as
propulsion equipment, attitude control products and so
on) and equipment products for the Ariane launchers.
The parties submit that there is no market for these
these
subsystems, on the grounds
systems or

that

(15) See Case IV/M.1564 — Astrolink.

RELEVANT GEOGRAPHIC MARKETS

Launch services

(124) The parties submit

the markets for commercial
launch services are worldwide, because competition for

that

28.11.2003

EN

Official Journal of the European Union

L 314/15

launch services occurs on a worldwide scale, with
customers able to choose between launchers operated
by institutional entities (such as Arianespace) or private
companies. This conclusion has been broadly confirmed
by the results of
the Commission enquiry, which
indicate that the supply of commercial launch services is
carried out on a global basis: for instance, more than
two thirds of Arianespace's commercial sales seem to be
made for customers outside the EEA. Consequently, the
markets for commercial
launch services appear to be
worldwide.

(129) Similarly,

if there were only one product market for
launch services,
the operation would not create a
dominant position, as Eurockot's market share (in terms
of orders) would be [< 10 %]* and Starsem's share would
be approximately [5-15 %]*.

(130)

In the light of the above,
it appears that the notified
operation does not create or strengthen a dominant
position in the markets for launch services as a result of
which effective
significantly
impeded in the EEA or any substantial part of that area.

competition would be

Launcher systems, subsystems and equipment

(125) As was explained in recital 121,

the selection of
suppliers of
for Ariane
subsystems and equipment
launchers usually takes place during the development
phase, and is governed by the ‘juste retour' principle. It
therefore appears that competition for these products
takes place at European level.

Launcher systems, subsystems and equipment

(131)

It appears that two launchers have been developed in
Europe in the last 25 years: the Ariane 1 to 4 family
(first
launched in 1979) and the Ariane 5 launcher
(which entered into commercial operations in December
1999).

COMPETITIVE ASSESSMENT

(132)

Launch services

their

through

interests

responsible

the Ariane

(126) Aérospatiale-Matra, MMS and DASA are active in launch
services
in Arianespace
Participations SA (which controls Arianespace SA, the
company
launcher
for
production phase and for the marketing and launch of
the Ariane launcher family). Furthermore, DASA has
joint control over Eurockot Launch Service GmbH, a
company created in 1998 to procure launch services for
LEO satellites with Russian Rockot small
launchers.
Finally, Aérospatiale-Matra has joint control over Vega
Spazio SpA, a company intended to develop a small
launcher
the Arianespace
product range and holds an equity stake in Starsem, a
company created for the commercialisation of
launch
services by Russian Soyuz medium launchers for LEO
and MEO satellites.

to complement

in order

(127) However, there is no indication that the parties and
their parent companies could have joint control over
Arianespace. […]*.

(128)

if
the small

the launch services performed by
In that context,
each of
launchers, medium launchers and
heavy-lift launchers constituted distinct product markets,
the operation would only create overlaps
in small
launchers, where Eurockot Launch Service GmbH and
in that sector,
Vega Spazio are active. Furthermore,
Eurockot Launch Service GmbH has just recently started
its operations, while Vega Spazio has not developed any
launcher yet and seems to be jeopardised after the
CNES, a major contributor, recently announced that it
was no longer participating in that project.

at

for

First,

prime-contractor

In addition to their equity stake in the Arianespace
the parties and their parent companies are
group,
the Ariane
engaged in a number of activities
level,
launchers.
Aérospatiale-Matra is the ‘architecte industriel' of
the
Ariane launchers and especially provides some technical
assistance to the CNES (the design authority for the
development phase of
launchers) or
Arianespace (responsible for the production, marketing
and launch of the Ariane launchers). Secondly, at system
level, Aérospatiale-Matra, MMS
and DASA are
responsible for the integration of most stages of the
current Ariane 4 and Ariane 5 launchers. Finally, at
subsystem level, Aérospatiale-Matra, MMS and DASA
each supplies certain equipment for the Ariane 4 and
Ariane 5 launchers.

the Ariane

and

through

(133) As was explained in recital 120, Ariane launchers are
developed
international
produced
(government-funded) programmes, where suppliers are
selected during the development phase, and usually
remain unchanged for the subsequent production and
launch phase. The operation will not have any adverse
impact on existing launchers, as suppliers have already
been selected during the development phase and the
production contracts already exist. The competitive
impact of the operation therefore needs to be assessed
to be developed
future products,
in the context of
and
development
existing
through
forthcoming development programmes within the
foreseeable future.

programmes

(134) As

as

far

existing development programmes

are
concerned, it appears that the only activity expected in
the foreseeable future relates to the recent ‘Ariane-plus'
programme,
intended to increase the payload capacity
the Ariane 5 launcher and expected to last until
of
the
2006.

programme mainly

involves

This

L 314/16

EN

Official Journal of the European Union

28.11.2003

development of a new cryogenic upper stage (called
ESC)
for Ariane 5 and the development of a new
cryogenic engine (called VINCI) for this stage.

(135)

for
the

that
(including

the main responsibilities
selection of

this
It appears
programme
ESC
the
integrator and the VINCI supplier) have already been
defined. However, given that
some subsystems and
equipment product suppliers remain to be selected, that
DASA is the ESC integrator and that Aérospatiale-Matra
is involved in some of the competitions still taking place
for the selection of subsystem and equipment suppliers
(especially the liquid oxygen tank for the new upper
stage and the intertank structure),
is necessary to
it
the operation could lead to the
examine whether
selection by DASA of Aérospatiale-Matra
to the
detriment of other competing suppliers and whether
this selection could create or strengthen a dominant
position.

(136) However, there appear to be very limited opportunities
for DASA to favour Aérospatiale-Matra. This is because
the main opportunities open to DASA for
such
distortion would concern the definition of product
specifications and evaluation criteria favouring in-house
suppliers, which is no longer possible as these items
have already been defined. Moreover,
it seems to be
difficult for DASA either to change these criteria or
specifications or alter
the evaluation,
because the selection of equipment suppliers in the
development phase is subject to the approval of the
CNES, which appears to have sufficient expertise to
detect such possible distortions.

the results of

(137)

suppliers

development programmes),
to a very limited number of

Finally, in any event (and even for other possible future
launcher
are
sophisticated
subject
customers (at present, only CNES and Arianespace for
the Ariane launchers) and there appears to be effective
competition in the field of
launch services, which is
confirmed by the strong fluctuations of market shares
and by the apparent steep reduction in the unitary
launch prices. In that context, CNES and Arianespace
appear to have sufficient countervailing buying power
to constrain the
their
suppliers, as well as having strong incentives to use this
power (which is further confirmed by the current efforts
undertaken so as to increase the performance and
reduce the costs of the Ariane 5 launcher) and there
appears to be no possibility for suppliers either to raise
prices or to impose unacceptable contractual conditions.

competitive behaviour of

for

(138) Within the foreseeable future, there might also be some
the development of an additional
possibilities
launcher
in Europe, complementary to the Ariane
family. To date, the most serious opportunity for such a
programme
launcher.
Aérospatiale-Matra is active in this programme through
its joint control (together with Fiat Avio) of Vega Spazio

is Vega

Spazio,

small

a

on

effect

SpA, the company intended to develop this launcher.
However, as was explained in recital 128,
the Vega
Spazio programme is seriously jeopardised as the CNES,
a major contributor, has recently announced that it was
no longer participating in the project. Furthermore,
there is no indication that the operation could have any
substantial
the
this
procurement and selection of suppliers for any new
launcher would very likely be subject to ‘juste retour'
considerations and neither France nor Germany are
participating in this programme any longer. Finally, in
any event,
the above considerations relating to the
presence of effective competition on the downstream
markets for launch services also seem to apply to small
launchers and would therefore probably seriously limit
any exercise of market power by an equipment supplier
or system integrator.

programme,

as

(139)

In the light of the above,
it appears that the notified
operation does not create or strengthen a dominant
position in launcher systems, subsystems and equipment
as a result of which effective competition would be
significantly impeded in the EEA or any substantial part
of that area.

D. GROUND SEGMENT

RELEVANT PRODUCT MARKETS

(140) Ground systems include all the specific ground facilities
to support the operations of the space segment. In the
case of space infrastructure,
such functions include
logistics, maintenance and repair, payload integration
and operation and space infrastructure control; and, in
the case of satellites, they can cover either the command
and control of spacecraft, or alternatively the provision
of an interface (namely transmission of voice and data
signals) with orbiting satellites or vehicles.

for

(141) Although ground systems may be purchased together
with the space segment, especially in the context of
turn-key offers, ground systems and satellites may also
be sold separately:
instance, customers already
operating several satellites will often not purchase new
ground systems, but simply upgrade existing stations or
replace
customers
procuring both the space segment and the ground
segment may select different suppliers for each segment.
Consequently, it appears that the ground segment and
the space segment belong to different product markets.

equipment.

Similarly,

obsolete

(142) The parties submit that a distinction should be made
and
infrastructure

ground systems

between space

28.11.2003

EN

Official Journal of the European Union

L 314/17

has

highly

segment

to meet

satellite ground systems, because the space infrastructure
ground
specific
requirements in terms of communications and safety
(especially in the case of systems intended to operate in
connection with a man-tended environment)
and
systems with
therefore generally consists of
specific
user
functionality,
interfaces and equipment.

application

software,

larger

(143)

In accordance with previous Commission decisions (16),
the parties also submit that ground stations fall into two
categories: first, those for the command and control of
spacecraft and secondly,
those providing an interface
(transmission of voice and data signals) with the space
segment.

(144) These definitions have been broadly confirmed by the
results of the Commission investigation. However, for
the purposes of this decision, it is not necessary further
to delineate the relevant product markets for the ground
alternative market definitions
segment,
be
competition would
considered,
significantly impeded in the EEA or any substantial part
of that area.

in all
effective

not

as

RELEVANT GEOGRAPHIC MARKETS

for

are

systems

supplied

commercial

(145) The parties state that ground systems for commercial
communication satellites
to satellite
prime-contractors or satellite operators by European and
US suppliers and therefore submit that the market for
communication
ground
satellites is worldwide. The parties also submit that, in
view of the ‘juste retour' principle governing the supply
of space infrastructure or observation and scientific
satellites to ESA, the markets for ground systems for
infrastructure or observation and scientific
space
satellites are usually EEA-wide. Finally,
the parties
submit that, in the military sector, ground systems are
usually procured on a restricted geographic basis, which
certain
may
programmes.

or multinational

national

for

be

(146) This

is

or

space

international

in
keeping with
previous Commission
decisions (17), where
the main
it was
found that
categories of customers for civil ground systems are the
national
and
organisations, as well as private operators and the main
customers for military ground stations are national
ministries of defence (MODs). While space agencies and
organisations and military customers usually procure
ground
from domestic prime-contractors,
commercial operators tend to source their systems on a
worldwide basis.

agencies

systems

(16) See, e.g., Case IV/M.496 — Marconi-Finmeccanica (OJ C 253,
IV/M.1185-Alcatel/Thomson-CSF-SCS (OJ

10.9.1994, p. 10) or
C 272, 1.9.1998, p. 5).

(17) See, e.g. Case IV/M.1185-Alcatel/Thomson-CSF-SCS: footnote 16.

COMPETITIVE ASSESSMENT

(147) Satellite

of

the

consist

control

systems

satellite operator's premises

two major
subsystems, a satellite control centre (generally located
at
and including
software, computers and command interfaces) and one
or more control stations (providing the link to the
satellite
radiofrequency
equipment).

especially

including

and

(148)

In that sector, MMS is active at the prime-contractor
level, where it supplies integrated control systems, as
well as at the subsystem level, where it offers control
centres to be included within communication satellite
control systems. DASA is also active at the subsystem
level, where it manufactures the radiofrequency part of
communication satellite control
stations through its
interest
in Nortel DASA Network Systems, a joint
venture with Nortel Networks Corporation.

(149) The operation therefore leads to a vertical

for

integration
in the supply of control
between MMS's activities
systems
and DASA's
communication satellites
activities in the radiofrequency part of control system.
However, competition for the supply of communication
satellites
for
communication satellites supplied in the context of
takes place at worldwide level and
turn-key offers)
MMS's share of integrated ground systems and DASA's
share of the radiofrequency part each remains below
[5-15 %]*.

segments

therefore

ground

(and

(150) The operation may also lead to a

conglomerate
integration at
the subsystem level between MMS's
activities in control centres and DASA's activities in the
radiofrequency part of control systems. However, on
none of these segments do the parties' market shares
exceed [5-15 %]*, whether at European or worldwide
level.

(which provide

(151) As far as the markets for satellite users systems are
concerned,
the operation will create some overlaps
between MMS and Nortel DASA Network Systems in
VSATs
final
the
subscriber) and mobile terminals (which provide the
same service as VSATs but are designed for mobile use).
However, on none of these markets do these companies'
combined shares of sales exceed [5-15 %]*, whether at
worldwide or European level.

interface

to the

(152)

it appears that the notified
In the light of the above,
operation does not create or strengthen a dominant
position on the markets for the satellite ground segment
as a result of which effective competition would be
significantly impeded in the EEA or any substantial part
of that area.

L 314/18

EN

Official Journal of the European Union

28.11.2003

V. COMMITMENTS AND ASSESSMENT

(153) On 24 January 2000,

the parties offered certain
commitments
to remove the competition concerns
which the Commission had identified. On 25 February
2000,
the parties submitted amended commitments
taking into account certain adjustments required by the
Commission in view of, in particular, the results of the
is
text of
market
annexed to this Decision.

the commitments

test. The full

(154) As described in recitals 84 and 92, those commitments,
if implemented, will remove the Commission's concerns
that
a
dominant position in the French market for military
communication satellites and in the European market
for mechanical wheels.

the proposed concentration would create

their parent
only to the extent
companies have a controlling interest in Astrium or its
parent companies.

the parties or

that

VII. CONCLUSION

(158) The Commission concludes that the undertakings given
by the parties are sufficient to remove the competition
concerns
identified by the Commission during its
investigation of the operation and described above.

therefore,

(159) According to Article 8(2) of the Merger Regulation and
on condition that the commitments described above and
annexed to this Decision are adhered to, the operation
to be declared compatible with the
is,
common market and the functioning of
the EEA
Agreement, since it does not create or strengthen a
dominant position as a result of which effective
competition would be significantly impeded in the EEA
or in a substantial part of it,

VI. ANCILLARY RESTRAINTS

HAS ADOPTED THIS DECISION:

Article 1

(155) The parties

companies
and their ultimate parent
(Lagardère, Aérospatiale Matra, DaimlerChrysler and
BAe) have entered into a non-competition agreement
whereby they will not carry on certain activities (such as
the manufacture of satellites, space infrastructure and
certain satellite components and subsystems) performed
by Astrium. This clause applies for so long as the
companies concerned hold a share in the Astrium group
or any of its parent companies.

this agreement appears to exceed what

(156) This restriction underlines the lasting withdrawal of the
parties and their parent companies from the scope of
business exclusively assigned to Astrium. However, the
scope of
is
directly related and necessary to the implementation of
the notified concentration, since the non-competition
agreement will remain valid even when the parties or
companies have only non-controlling
their parent
interests
its parent companies and
therefore in cases where these companies will not have
any opportunity to exercise a decisive influence over
Astrium.

in Astrium or

(157) This non-competition agreement is directly related and
necessary
the notified
concentration and therefore covered by this decision

implementation of

to the

On condition that the commitments summarised above and
laid out in detail
in the Annex are fully complied with, the
concentration notified on 29 October 1999 consisting of the
creation of Astrium is declared compatible with the common
market and the functioning of the EEA Agreement.

Article 2

This Decision is addressed to:

Matra Marconi Space NV
c/o Price Waterhouse Vooren
Koninginnegracht
2514AA The Hague
Netherlands

DaimlerChrysler
D-70546 Stuttgart
Germany

Done at Brussels, 21 March 2000.

For the Commission

Mario MONTI

Member of the Commission

28.11.2003

EN

Official Journal of the European Union

L 314/19

ANNEX

UNDERTAKING

Subject to the following provisos and without prejudice to their rights under applicable laws and regulations, Dasa
Dornier Raumfahrt Holding GmbH (DDRH) and Matra Marconi Space NV (MMS) (collectively,
‘the Parties') give the
following undertaking (the undertaking) in respect of the Astrium transaction notified to the Commission on October
29, 1999 (the transaction).

This undertaking shall become effective upon receipt of the Commission's decision approving the transaction (effective
date). The Parties therefore undertake to procure that:

1. Unified propulsion systems (UPS)

Astrium NV or any of its subsidiaries (Astrium) shall grant to a specialised subsystem/equipment manufacturer,
[…]*, a non-exclusive long-term licence under all relevant DASA intellectual property rights (including technology,
know-how, manufacturing processes, procedures and relevant patents), in accordance with the procedure set out in
Annexes 1 and 4, to manufacture and sell UPS, as currently manufactured by DASA or its affiliated companies, for
use on the Spacebus 3000 platform; as part of the licence, the Parties shall procure that Astrium provides at the
licensee's request and at cost, during a sufficient period of time after the date on which the licence is granted, all
the technical assistance reasonably necessary for the purpose of enabling the licensee to manufacture independently
from Astrium the relevant product and/or provide integration services with its own personnel.

2. Chemical thrusters

As a complement to the UPS licence or separately, Astrium shall grant to a specialised subsystem/equipment
manufacturer,
[…]*, a non-exclusive long-term licence under all relevant DASA intellectual property rights
(including technology, know-how, manufacturing processes, procedures and relevant patents), in accordance with
the procedure set out in Annexes 1 and 4, to manufacture and sell bi-propellant thrusters for the same purpose as
provided in paragraph 1 hereof. As part of the licence, the Parties shall procure that Astrium provides at the
licensee's request and at cost, during a sufficient period of time after the date on which the licence is granted, all
the technical assistance reasonably necessary for the purpose of enabling the licensee to manufacture independently
from Astrium the relevant product with its own personnel.

3. Mechanical wheels

Astrium shall divest to a suitable purchaser the mechanical wheels business of MMS in the United Kingdom as
described in Annex 2. The divestment will be carried out in accordance with the procedure set out in Annexes 3
and 4. Until such divestment, Astrium shall cause the mechanical wheels business of MMS to be conducted in the
ordinary and normal course of business in accordance with past business practice and with the care of a prudent
businessman and that all reasonable measures are taken to protect and preserve the value of the relevant assets.

For a period of […]* following the divestment, Astrium undertakes in respect of the mechanical wheels business
not to compete with the purchaser of this business and not to solicit the purchaser's employees.

4. On-board management systems

Astrium shall grant under relevant DASA intellectual property rights (including patents) a non-exclusive long-term
licence,
in accordance with the procedure set out in Annexes 1 and 4, to a specialised subsystem/equipment
manufacturer, […]*, to manufacture (on a ‘build-to-print' basis) and sell the DASA attitude and orbit control system
(AOCS) used on the Spacebus 3000 platform, including the on-board computer system and the on-board system
software used on the Spacebus 3000 platform. As part of the licence, the Parties shall procure that Astrium
provides at the licensee's request and at cost, during a sufficient period of time after the date on which the licence

L 314/20

EN

Official Journal of the European Union

28.11.2003

is granted, all the technical assistance reasonably necessary for the purpose of enabling the licensee to manufacture
independently from Astrium the relevant product with its own personnel.

Matra Marconi Space NV

Dasa Dornier Raumfahrt Holding GmbH

Name:

Title:

Name:

Title:

28.11.2003

EN

Official Journal of the European Union

L 314/21

ANNEX 1

LICENCES

The Parties agree to grant the licences referred to in paragraphs 1, 2 and 4 of the undertaking (the licences)
accordance with the following procedure:

in

The Parties shall procure that Astrium enters into the relevant licence, on a reasonable royalty-bearing basis, with a
suitable licensee to be approved by the Commission (the licensee) within a period of […]* from the effective date.

1.

Such licensee shall have the capability of successfully and independently manufacturing the relevant product and/or
provide the relevant integration services. In particular, the potential licensee shall have sufficient skills, production
and testing facilities in the relevant business area.

2. To assist the Commission in determining whether any proposed licensee is suitable, the Parties shall submit a fully

documented and reasoned proposal enabling the Commission to verify that

(i)

the Parties do not own a material interest (whether direct or indirect) in the licensee;

(ii)

the licence allows the licensee to operate as a viable competitive force on the market; and

(iii) the licence is appropriate and sufficient,

in particular with respect to its duration and the provision of
technical assistance, to enable the licensee to manufacture successfully and independently the relevant product
and/or provide the relevant integration services.

3. The Parties shall obtain the Commission's prior approval to the relevant final draft licence, such approval not to be
unreasonably withheld. The request for approval shall be made at the same time as the request for approval of the
licensee.

4. Within ten (10) days from the effective date, the Parties shall appoint an independent and experienced trustee (the

interim trustee) to oversee and monitor the Parties' compliance with the terms of this undertaking.

5.

If the relevant licence has not been granted by the Parties within […]* from the effective date, the Parties shall
grant to the interim trustee an irrevocable mandate, in accordance with the provisions of Annex 4, to grant the
licence at the best conditions available within a period of […]*.

6. As soon as is practically possible after it has been appointed, the Parties shall procure that the interim trustee shall
obtain the Commission's prior approval of a list of potential
licensees after preliminary discussions with the
parties, based on the criteria specified above in paragraphs 1 and 2. The parties shall procure that the Interim
Trustee will keep the Commission regularly appraised of any ongoing discussions with potential licensees.

7. The appointment of the interim trustee shall be made in accordance with the procedure set out in Annex 4.

L 314/22

EN

Official Journal of the European Union

28.11.2003

ANNEX 2

(Buisiness Secrets)

DESCRIPTION OF MMS'S MECHANICAL WHEELS BUSINESS

MMS's Mechanical wheels business comprises the following:

1. MMS's dedicated tangible fixed assets for the mechanical wheels business (the business), including:

— […]*.

2. All rights to relevant contracts for such business, and customers' and suppliers' contact details.

3. All

intellectual property rights owned by MMS relating to mechanical wheel design and manufacturing design

descriptions as well as manufacturing files and processes for the business.

4.

[…]*.

28.11.2003

EN

Official Journal of the European Union

L 314/23

ANNEX 3

DIVESTITURE

The Parties agree to implement the commitments referred to in paragraph 3 of the undertaking in accordance with the
following procedure:

1. The Parties shall procure that Astrium divests to a suitable purchaser (the purchaser) to be approved by the
Commission the mechanical wheels business of MMS (the business) within a period of […]* from the effective date
(period 1).

2.

Such purchaser shall have the capability of successfully and independently manufacturing the relevant product. In
particular, the potential purchaser shall have sufficient skills, production and testing facilities in the relevant
business area.

3. To assist the Commission in determining whether any proposed purchaser is suitable, the Parties shall submit a

fully documented and reasoned proposal enabling the Commission to verify that

(i)

the Parties do not own a material interest (whether direct or indirect) in the purchaser;

(ii)

the sale allows the purchaser to manufacture to successfully and independently the relevant product; and

(iii) at the time of completion of the purchase agreement of the business, the purchaser has, or can reasonably be
expected to obtain, all necessary approvals for the purchase from the relevant competition authorities in the
European Community.

4. Within ten (10) days from the effective date, the Parties shall nominate an independent and experienced trustee (the
interim Trustee) to oversee and monitor the Parties' compliance with the terms of this undertaking during period
1.

5.

If a purchaser for the relevant business has not been approved by the Commission within […]* from the effective
date, the Parties shall grant to the interim trustee an irrevocable mandate, in accordance with the provisions of
Annex 4, for the sale of such business. This mandate shall have a duration of […]* from the end of period 1
(period 2).

6. As soon as is practically possible after it has been appointed, the interim trustee shall obtain the Commission's
prior approval of a list of potential purchasers after preliminary discussions with the Parties. The interim trustee
will keep the Commission regularly appraised of any ongoing discussions with potential purchasers.

7. The appointment of the interim trustee shall be made in accordance with the procedure set out in Annex 4.

L 314/24

EN

Official Journal of the European Union

28.11.2003

ANNEX 4

GENERAL PROVISIONS

1. The Parties shall propose to the Commission the name of an independent and experienced institution that they
consider appropriate to be appointed as trustee. Such proposal shall be made within ten (10) working days after
the date on which the obligation to appoint a trustee enters into force. The Commission shall have the discretion
to approve or reject the proposed institution in accordance with paragraph 10 below. If the proposed institution is
rejected, the Parties shall submit the names of at least two further institutions, within five (5) working days of
being informed of the rejection. If more than one name is approved by the Commission, the Parties shall be free to
choose the trustee to be appointed from among the names approved. If all further names are rejected by the
Commission, the Commission shall nominate a trustee to be appointed by the Parties.

2. The trustee shall be appointed within five (5) working days after the Commission's explicit approval or its implicit

approval, in accordance with paragraphs 1, 8 and 10 hereof.

3. Along with their request for the Commission's approval of a proposed trustee, the Parties shall submit a proposed
draft mandate setting forth in detail the scope of the mandate (including an incentive on the trustee to use its best
efforts in arranging a prompt value-maximising transaction) and the responsibilities to be performed by the
institution under the mandate. At the Commission's reasonable request, the Parties shall modify the proposed
mandate, in order to ensure that it is in accordance with the provisions of this undertaking. Once the mandate has
been executed, the Parties shall not be entitled to make any changes to such mandate without the Commission's
prior approval.

4. The trustee's mandate shall include the following responsibilities:

(i)

to monitor the satisfactory discharge by the Parties of the obligations entered into in this undertaking (in so far
as they fall within the scope of the trustee's mandate);

(ii)

to provide written reports to the Commission on the progress of the discharge of its mandate, identifying any
respects in which the trustee has been unable to discharge its mandate. Such reports shall be provided in
English within ten (10) working days from the end of every two (2) month period following the trustee's
appointment or at such other time(s) or time periods as the Commission may specify, and which shall cover
simultaneously a
the developments of
non-confidential copy of such trustee reports;

two-month period. The Parties

the previous

receive

shall

(iii) at any time, to provide to the Commission, at its request, a written or oral report on matters falling within the
trustee's mandate. The Parties shall receive simultaneously a non-confidential copy of such additional written
reports and shall be informed promptly of the non-confidential content of any oral reports.

5.

If this undertaking requires the mandate of a trustee to include the responsibility to conduct negotiations, and
propose a licensee or, as the case may be, a purchaser, the trustee shall:

(i) notify the Commission as soon as practically possible concerning the identity of potential

licensees or
purchasers after prior discussions with the Parties and advise the Commission why it believes such licensees or
purchasers are suitable, in view of the criteria specified above;

(ii) end negotiations with any prospective purchaser, if the Commission determines that the negotiations are being

conducted with an unsuitable purchaser;

(iii) carry out the negotiations with the view to concluding a binding agreement (subject to the closing of the
Transaction) that takes into account the financial interest of the Parties (i.e., to obtain the best price and terms
possible within the context of the trustee's mandate).

6. The Parties shall provide the trustee with all such assistance and information,

including copies of all relevant
documents, as the trustee may reasonably require in carrying out its mandate; subject to any security restrictions,
the trustee shall have full and complete access to Astrium's personnel, books, records, documents, facilities and
technical information relating to the manufacture of the relevant products to be licensed hereunder, or to any other
relevant information, as the trustee may reasonably request, subject always to such access being limited to the
scope of the trustee's mandate.

28.11.2003

EN

Official Journal of the European Union

L 314/25

7. As soon as the specific remedy with which the trustee has been entrusted has been implemented, the trustee's
mandate in respect of that specific remedy shall be terminated subject to the prior approval of the Commission.
However, the Commission may at any time require the reappointment of the trustee if it subsequently appears that
the relevant remedy might not have been fully and properly implemented.

8.

9.

If the Commission has not within fifteen (15) working days following receipt of a fully documented and reasoned
request rejected in writing any proposal submitted to it for approval pursuant to this undertaking, the proposal
shall be deemed to be approved.

In the event that exceptional circumstances arise that make the compliance with the timetable provided herein
impossible or very difficult, and the Parties provide to the Commission reasonable evidence of such exceptional
circumstances, the time periods set forth in Annexes 1 and 3 for the implementation of the undertaking may be
extended by mutual agreement of the Parties and the Commission.

10. Any requests or proposals requiring Commission approval shall be addressed to the Director of Directorate B of
the Commission's Directorate-General
for Competition, 150 Avenue de Cortenberg, 1000 Brussels. Any
communications to the Parties shall be addressed to persons to be determined and communicated to the
Commission before the effective date.