CELEX: 31996M0686
Language: en
Date: 1996-02-05 00:00:00
Title: COMMISSION DECISION of 05/02/1996 declaring a concentration to be compatible with the common market (Case No IV/M.686 - Nokia / Autoliv) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31996M0686

COMMISSION DECISION of 05/02/1996 declaring a concentration to be compatible with the common market (Case No IV/M.686 - Nokia / Autoliv) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 069 , 07/03/1996 P. 0003

  COMMISSION DECISION of 05/02/1996 declaring a concentration  to be compatible with the common market (Case No IV/M.686 -  Nokia / Autoliv) 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)(b) DECISION  To the notifying parties  Dear Sirs,  Subject :<ind> Case No IV/M.686  NOKIA / AUTOLIV  <ind> <ind> Notification of  03.01.1996 pursuant to Article  4 of Council Regulation No 4064/89  1.<ind> The notified operation concerns the creation of a  joint venture, Autoliv Nokia AB,  by Nokia Audio &  Electronics AB, an undertaking controlled by the Nokia  group, and Autoliv AB. The new joint venture will take over  Nokia's airbag control electronic business, including all  its assets and staff.  2.<ind> After examination of the notification, the  Commission has concluded that the notified operation falls  within the scope of application of Council Regulation  No.4064/89 and does not raise serious doubts as to its  compatibility with the common market and the functioning of  the EEA Agreement.  I.<ind> THE PARTIES   3.<ind> Nokia Audio & Electronics AB manufactures systems  for the automotive industry including airbag control  electronics. It is part of the Nokia group, an international  telecommunications and electronics group (Nokia). Nokia  group's business activities include systems used in mobile  and fixed networks, mobile phones, cables for  telecommunications and consumer and industrial electronics.    4.<ind> Autoliv Group is a Swedish  incorporated  group  manufacturer and supplier of occupant restraint systems to  the automobile industry (Autoliv). Restraint systems  comprise seat belts, airbags and other associated safety  devices including child restraint systems integrated with  the car seat.  II.<ind> CONCENTRATION  <ind> a) Joint control  5.<ind> The proposed concentration is structured in a  Shareholders Agreement between Nokia  Audio & Electronics AB  and Autoliv. The parties will share equally shareholdings  and voting rights in the joint venture. Matters of major  importance, such as investments exceeding 118 000 ECU, the  annual budget and the appointment of the managers of the  company, shall require the parties unanimous decision. It  follows that the joint venture will operate under the joint  control of Nokia and Autoliv and that therefore the  operation constitutes a joint venture within the meaning of  Article 3 of the Merger Regulation.  <ind> b) Concentrative joint venture  6.<ind> As set out in the Asset Purchase Agreement the joint  venture will acquire Nokia's airbag control electronic  business on a lastingbasis. The joint venture will  have its  own  marketing and sales organization. It will carry out  research and development independently and in cooperation  with others. The agreements are for an indefinite period of  time. However, at present, the Autoliv Group is the only  customer of the joint venture, which is acceptable during  the startup period of a jointventure. Autoliv buys airbag  electronic control units to combine them with their own  airbag modules to provide complete airbag systems. Sales to  Autoliv will be made on normal commercial conditions. The  parties intend to broaden the joint venture's customer base  in the future. They expect sales to third parties, mainly  car manufacturers, to amount to more than 50% of the joint  venture's production within three years. This period can be  regarded as reasonable to achieve significant sales to third  parties. The Commission inquiry has shown that, while there  is no clear trend in the industry, a number of important car  manufacturers currently purchase and intend to purchase  airbag electronics separately from the airbag modules. They  prefer to keep the system integration inhouse as it  increases their flexibility in terms of technology and  price. It is therefore likely that the joint venture will  indeed increase its customer base to include significant  sales to companies other than Autoliv.  7.<ind> Nokia will sublease to the joint venture the  premises presently occupied by its airbag control  electronics division. It will provide the joint venture with  accounting and other administrative services. The Sourcing  Service Agreement will give the joint venture certain rights  to use Nokia's channel for purchases of certain materials.  However, these materials represent only about 50 % of the  value of all inputs purchased and 30 % of the final sales  price of an airbag control electronic unit. Furthermore, the  joint venture will have the possibility to terminate the  agreements and carry out the functions on its own or move  from Nokia's premises. Thus, the joint venture will perform,  on a lasting basis, all the functions of an autonomous  economic entity.  8.<ind> No coordination of competitive behaviour between  Nokia and Autoliv will result from this operation, since  Nokia participates in the airbag control electronics field  of activities only through the joint venture. The operation  is therefore a concentration within the meaning of Article 3  of the Merger Regulation.   III.<ind> COMMUNITY DIMENSION  9.<ind> The undertakings concerned have a combined aggregate  worldwide turnover in excess of 5000 million ECU (Nokia 5.5  billion Ecu, Autoliv 1.05 billion Ecu). Both Nokia and  Autoliv have a Communitywide turnover in excess of 250  million ECU, but do not achieve more than twothirds of their  aggregate Communitywide turnover within one and the same  Member State. The notified operation therefore has a  Community dimension.   IV.<ind> COMPATIBILITY WITH THE COMMON MARKET  <tab> Relevant product market  10.<ind> The joint venture is active in the relevant market  for airbag control electronics. <ind> Airbag control  electronisc generally consits of an electronic control unit  with a sensor. They are built into cars where they are  linked via a cable to the airbag module which they trigger  in case of an accident. Airbag modules (which are produced  inter alia by Autoliv) consist of a gas generator and a bag  with a cover for the steering wheel or the instrument panel.  Both airbag control electronics and airbag modules are  sophisticated products which are adapted to each individual  car model. Therefore, for security and quality reasons, all  replacements and spare parts are supplied by the individual  car manufacturer, directly or indirectly. Thus, all  replacements and spare parts originate from the individual  car manufacturer who obtains them from its supplier of  airbag systems. Therefore, no independent replacement market  for airbag control electronics exits.  <tab> Relevant geographic market   11.<ind> In previous cases (most recently Case n  IV/M.666  JOHNSON CONTROLS/ROTH FRERES), the Commission has considered  the scope for markets for car components as Europeanwide.  Although market shares could differ substantially between  different Member States, this would depend on the number of   contracts signed with car manufacturers having an  Europeanwide buying policy.   12. <ind> In the market for airbag electronic control units  the Commission inquiry has shown that all customers buy  these products on a European or Worldwide level and that  prices and delivery conditions are homogeneous within the  EEA. The relevant geographicmarket is, therefore, at least  the EEA.  <tab> Assessment  13.<ind> The parties combined market share within the EEA  territory on the airbag control electronics market will be  13%. However, the new entity will compete in the sector with  other international strong groups with high market shares  such as Siemens (the market leader with a share of around  40%), ELO Ford, Temic and Bosch.  14.<ind> Autoliv is active in the market for airbag modules  where it holds a strong position (around 40% in the EEA).  This operation will, however, not enhance significantly  Autoliv's present position in this related market. First,  Autoliv has strong competitors in the airbag module market  which include Petri (2025%) TRW (1525%), MST (around 15%),  Morton International and Allied Signal. Secondly, Autoliv's  main customers are big car manufacturers that did not  express any concern about the possible effects of the merger  during the Commission's inquiry. In view of this, the  operation does not raise serious doubts about its  compatibility with the common market.  V.<tab> ANCILLARY RESTRAINTS  15.<ind> The notifying parties have requested that the   clauses and agreements described below be considered as  ancillary to the concentration.  16.<ind> Nokia grants free of charge to the joint venture a  nonexclusive and nonassignable (no right to sublicence)  worldwide right and licence to make use of, exclusively in  the field of airbag control electronic business, any and all  knowhow belonging to Nokia. This license shall automatically  terminate if and when Nokia's shareholding in the joint  venture falls below 50% and/or upon termination of the  agreement, whichever earliest.  17.<ind> None of the parties to the agreements shall  incumber or dispose off any of the shares of the joint  venture held by it except on predeterminated conditions. The  parties will keep confidential and not disclose or use  information relating to the business during the term of the  agreements and two years thereafter.  18.<ind> To the extend that these clauses include any  restriction of competition they may be considered as  directly related and necessary to the implementation of the  concentration.  VI.<tab> CONCLUSION  19.<ind> It follows from the above that the proposed  concentration would not create or strengthen a dominant  position as a result of which competition would be  significantly impeded in the common market or in a  substantial part of it.  <ind> For the above reasons, the Commission has decided not  to oppose the notified operation and to declare it  compatible with the common market and with the functioning  of the EEA Agreement. This decision is adopted in  application of Article 6(1)(b) of Council Regulation No  4064/89.  For the Commission,