CELEX: 31996M0722
Language: en
Date: 1996-04-15 00:00:00
Title: Commission Decision of 15/04/1996 declaring a concentration t be compatible with the common market (Case No IV/M.722 - Tene / Merrill Lynch / Bankers Trust) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31996M0722

Commission Decision of 15/04/1996 declaring a concentration t be compatible with the common market (Case No IV/M.722 - Tene / Merrill Lynch / Bankers Trust) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 159 , 04/06/1996 P. 0004

  COMMISSION DECISION of 15/04/1996 declaring a concentration  to be compatible with the common market (Case No IV/M.722 -  Teneo / Merrill Lynch / Bankers Trust) 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  To the notifying parties:  Subject: Case N  IV/M.722  TENEO/MERRILL LYNCH/BANKERS TRUST     Notification of 12.3.1996 pursuant to Article 4 of  Council Regulation No 4064/89  1. On 12.3.1996 the Commission received a notification of an  operation whereby Téneo S.A., Merrill Lynch Europe PLC (MLE)  and Bankers Trust Foreign Investment Corporation (BT)  establish a joint venture, to be named Andes Holding  B.V.(Andes), which will hold certain South American Airline  interest formerly owned by Iberia Líneas Aéreas de España,  S.A. (Iberia).   2.  On 19.03.1996 the Commission granted the parties a  derogation from the obligation to suspend the concentration,  imposed by Article 7(1) of the Merger Regulation of Council  Regulation No. 4064/89 (the Merger Regulation) pursuant to  Article 7(4) of the said regulation.   3. After examination of the notification, the Commission has  concluded that the notified operation  does not fall within  the scope of the Merger Regulation.  I. THE PARTIES AND THE OPERATION  4. MLE is a subsidiary of the American undertaking Merrill  Lynch & Co., Inc., which provides investment, financing,  insurance and related services on a global basis. BT is a  subsidiary of Bankers Trust Company, one of the largest  commercial banks in the United States.  5. Téneo is an autonomous holding company with interests in  the energy, air transport, aerospace, engineering and  construction, aluminium, cellulose and sea transport sectors  with 100% of its share capital owned by the Kingdom of  Spain. It is the Holding Company of Iberia.  6. AA is an airline principally (but not exclusively)  operating to and from destinations in Argentina to various  parts of the world. Through its subsidiary Austral, it also  operates domestic flights within Argentina.   7. Andes is a joint venture that will be owned as to 42% by  Téneo, 49% by MLE and 9% by BT. It will acquire from Iberia  all the shares of the Argentinean holding company  Interinvest S.A., which holds a majority of the shares of  Aerolíneas Argentínas (AA) and its affiliated company  Austral, one of Argentina's domestic airlines. Andes will  acquire directly from  Iberia additional interests in AA and  Ladeco, which is a Chilean airline company . After  completion of the transaction  Andes will own 86.16% of AA,  89.99% of Austral and 13% of Ladeco.  8. The background to the above referred operation is fully  explained in the Commission decision of 31 January 1996  under Article 93(2) EC Treaty. In that decision the  Commission did not consider that the operation under  consideration in this case was a State aid in the sense of  Article 92 paragraph 1 of the EC Treaty. The proposal to  establish the current joint venture was a key factor,  subject to other conditions, in enabling the Commission to  consider that the capital injection by Téneo was in  accordance with the market investor principle and that the  sale of the assets permitted a substantial reduction in the  risks which had been borne until now by Iberia through its  involvement in the South American airline companies.  In  this context, the joint venture has been created as an  intermediate step to the disposal of a part of Iberia's  Latin American assets. The parties expect the disposal to  take place within a period of three years.    9. There is a Management Agreement signed between Iberia and  AA which confers substantial powers to Iberia over AA.   Under paragraph 14 of  the Share Purchase Agreement between  Andes and Iberia, Iberia will comply with its duties  applying the diligence of a prudent businessman ("ordenado  comerciante"). It will terminate its services if so  instructed by Andes.   10. Andes will have eleven Directors. Téneo and MLE will be  entitled to nominate five Directors each. BT is entitled to  nominate one Director. Decisions will be adopted by simple  majority.  The Chairman will not have a casting vote.  11. According to the Shareholders Agreement, matters  requiring unanimous consent of the shareholders are limited  and veto rights are not different from those generally given  to strong financial investors and other minority interests.  According to these provisions Andes may, with the joint  consent of MLE and BT, enter into any arrangement for any  joint venture, acquire, sell or dispose of any assets,  merge, issue  debentures or loans, etc. This identifies MLE  and BT as finance providers in order to secure the debt. In  fact MLE and BT will begin to take steps to sell the assets  of Andes shortly after it is incorporated, although Iberia  has an option to  repurchase the assets during a period of  two years.   12. Although paragraph 11.2 of the Share Purchase Agreement  between Andes and Iberia establish that Iberia will prepare  a five year strategic business plan acceptable to Andes and  the majority senior lenders (MLE and BT) in their sole  discretion, neither further definition of the content nor  binding effects of the business plan are disclosed in the  agreement.   II. CONCENTRATION  13. Article 3 (2), second subparagraph, of Regulation No  4064/89 stipulates that a joint venture must perform, on a  lasting basis, all the functions of an autonomous economic  entity.  14. Andes has a reduced amount of capital (10 million US  Dollars) in proportion to its total financial needs and will  finance its assets with debt from its shareholders. It will  not have the staff or technical resources needed to  undertake the operational management of the business of  which, it will be temporary owner, for which reason such  management will be undertaken by Iberia under a forty two  month contract.   15. It is the intention of the parties, as described in the  Commission Decision  on State Aids to dispose of Andes  assets to third parties within three years, repay its loans  to its shareholders and distribute any surplus. On this  basis only, and subject to other conditions, the Commission  has allowed the capital increase of Iberia. Andes is,  therefore, purely a vehicle for the temporary holding of the  shares and once its objectives are achieved the Company will  be dissolved. Thus, the existence of the vehicle transaction  and the holding of the assets acquired will be limited in  time and not long lasting within the meaning of Article 3.2  of the Merger Regulation.  16. The creation of Andes by Téneo, MLE and BT is not a  concentration within the meaning of Regulation 4064/89 as it  will not be a joint venture performing on a lasting basis  all the functions of an autonomous economic entity.   III. CONCLUSION   For the above reasons the Commission has concluded that the  notified operation does not constitute a concentration  within the meaning of Article 3 of the Merger Regulation and  consequently does not fall within the scope of this  Regulation. This decision is adopted in application of  Article 6(1)(a) of Council Regulation No.4064/89.   For the Commission,