CELEX: 31994M0397
Language: en
Date: 1994-03-07 00:00:00
Title: COMMISSION DECISION of 07.03.1994 declaring a concentration to be compatible with the common market (Case No IV/M.397 - FORD / HERTZ) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31994M0397

COMMISSION DECISION of 07.03.1994 declaring a concentration to be compatible with the common market (Case No IV/M.397 - FORD / HERTZ) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 121 , 03/05/1994 P. 0000

 COMMISSION DECISION of 07.03.1994 declaring a concentration to  be compatible with the common market (Case No IV/M.397 - FORD /  HERTZ) according to Council Regulation (EEC) No 4064/89  (Only the English text is authentic)  The paper version of the decision is available through the  sales offices of the Office of Official Publications of the  European Communities. PUBLIC VERSION MERGER PROCEDURE ARTICLE 6(1)(a) DECISION Registered with advice of delivery To the notifying party Dear Sirs, Subject: <tab> Case No. IV/M.397 - Ford / Hertz  <tab>  <ind> Notification of 4.2.1994 pursuant to Article 4 of  Council Regulation No. 4064/89  1. <ind> The above mentioned notification concerns an agreement  between the Ford Motor Company (Ford) and Commerzbank AG  whereby Ford offers to purchase from Commerzbank 5% of the  share capital of The Hertz Corporation (Hertz).  Following the  notified operation Ford will hold 54% of the shares of Hertz.  2. <ind> After examination of the notification, the Commission  has concluded that the notified operation does not fall within  the scope of application of council Regulation No. 4064/89.  I <tab> THE PARTIES  3. <ind> Ford is primarily involved in the manufacture and  distribution of automotive vehicles and the provision of  financial services, particularly to buyers of automotive  vehicles.  The Hertz business consists of car and truck rentals  and leasing, construction equipment rental and second-hand  vehicle sales.  Both parties are active worldwide.  II <tab> COMMUNITY DIMENSION  4. <ind> The undertakings concerned have a combined aggregate  worldwide turnover in excess of 5,000 million ECU.  Both Ford  and Hertz have a Community-wide turnover in excess of 250  million ECU but do not achieve more than two-thirds of their  aggregate Community-wide turnover within one and the same  Member State.  The notifed operation therefore has a Community  dimension.  III <tab> ABSENCE OF CHANGE IN THE DEGREE AND QUALITY OF  CONTROL  5. <ind> Before the present operation, Ford was already the  single major shareholder of Hertz, holding 49% of the voting  rights and having the power to appoint 4 directors out of a  total of 9 members of Hertz's Board whose decisions were taken  by simple majority.  Ford was also granted substantial veto  rights on matters which should be viewed as primarily aimed to  protect Ford's financial investment in Hertz.  These matters  included inter-alia the issuance of shares, changes to the  company statutes, acquisitions or divestitures and vehicle  supply agreements.  6. <ind> Ford's voting and veto rights in Hertz described  above, although important, did not confer upon it a "de jure"  right of control of Hertz since, on the one hand, Ford did not  have the majority of the votes on the Board, and on the other,  the veto rights which were granted to Ford did not include  essential matters related to the conduct of Hertz's businesses  such as the establishment of the business plan and the budget  and decisions regarding major capital expenditure.  7. <ind> However, in addition to these rights (mentioned in  paragraph 5) Ford was also granted by the 1989 Stockholders'  Agreement between Ford and all other shareholders in Hertz the  power to convert, at its sole discretion and at any time, part  of its Class C shares into Class B shares, and by this  operation to increase its representation on Hertz's Board to an  absolute majority with the addition of two other directors.   Ford's conversion rights could be exercised in a matter of  hours and did not require any further cash disbursement.   8. <ind> For instance, should the Hertz's other stockholders  decide to support a Board decision against Ford's will, in a  matter of days or even hours Ford would have the possibility of  converting a minimum of 200 Class C shares into 200 Class B  shares, so becoming entitled, according to the Stockholders'  Agreement, to appoint two additional directors and thus take  control of the Board.  The new Board, controlled by Ford, would  then be able to vote again on the contested matters and take a  new decision in accordance with Ford's proposals.  9. <ind> Ford's unconditional right to obtain a majority on the  Hertz Board at any time can therefore be viewed as conferring  upon them "de facto" sole control of Hertz.  Indeed, since the  acquisition of Ford's interest in Hertz, the decisions of the  Board have been consistently taken by unanimity and Ford,  therefore, has not needed to exercise that contractual right,  as its proposals related to the business conduct of Hertz have  always been put into effect by Hertz.  IV <ind> CONCLUSION  10. <ind> For the foregoing reasons, taking into account that  the notified operation - although allowing Ford to obtain a "de  jure" control of Hertz by acquiring a majority of the voting  rights and of the Board representation - does not imply a  change in the quality and degree of decisive influence already  exercised by Ford on the conduct of the business of Hertz, the  proposed operation does not satisfy the conditions of Article  3(1) of the Merger Regulation and therefore does not fall  within its scope.  This decision is adopted in application of  Article 6(1)(a) of Council Regulation No. 4064/89.  For the Commission