CELEX: 31996M0823
Language: en
Date: 1996-10-07 00:00:00
Title: COMMISSION DECISION of 07/10/1996 declaring a concentration to be compatible with the common market (Case No IV/M.823 - John Deere Capital Corp/Lombard North Central plc) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31996M0823

COMMISSION DECISION of 07/10/1996 declaring a concentration to be compatible with the common market (Case No IV/M.823 - John Deere Capital Corp/Lombard North Central plc) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 359 , 28/11/1996 P. 0011

 COMMISSION DECISION of 07/10/1996 declaring a concentration to be  compatible with the common market (Case No IV/M.823 - John Deere Capital  Corp/Lombard North Central plc) 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.823  John Deere Capital Corp./Lombard North  Central plc <ind> <ind> Notification of 05.09.1996 pursuant to Article 4 of Council  Regulation No 4064/89 1.<ind> On 5 September 1996 John Deere Capital Corporation (USA) (JD  Capital) and Lombard North Central plc (United Kingdom) (Lombard) notified  to the Commission an intended operation whereby they acquire within the  meaning of article 3(1)(b) of Council Regulation 4064/89 joint control of  John Deere Credit Ltd (United Kingdom) (JD Credit). 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 with the  functioning of the EEA Agreement. I.<ind> THE PARTIES 3.<ind> JD Capital is an indirect wholly owned subsidiary of Deere & Co  (USA). Deere is involved in the manufacture and distribution of  agricultural, industrial and other equipment and in the supply of credit  and insurance. JD Capital is the holding company of companies which  provide agricultural financing in the USA, Canada and Mexico. 4.<ind> Lombard is a wholly owned subsidiary of National Westminster Bank  plc (United Kingdom) (National Westminster). Its principal activities are  the acceptance of deposits from the public and the provision of banking  and financial services, including instalment credit, leasing and loans.  The National Westminster Bank group (the NatWest group) supplies banking,  financial and related activities. II.<ind> THE OPERATION <ind> Introduction 5.<ind> JD Credit is at present an inactive subsidiary of Lombard, renamed  for the purposes of this operation. Following the operation it will be  engaged in the supply of financing for the lease, hire and purchase of  agricultural and related machinery, equipment and supplies in the United  Kingdom. <ind> Joint control 6.<ind> JD Capital will acquire 49.9 per cent of the shares in JD Credit  and will have the right to nominate three of its seven directors. But its  strategic, commercial and competitive activities will be subject to the  unanimous consent of both JD Capital and Lombard. By the joint venture  agreement the unanimous agreement of JD Capital and Lombard (not to be  unreasonably withheld or delayed [In the event of ultimate disagreement  the joint venture terminates]) is required for capital expenditure above  [Deleted for publication   a relatively low threshold for the industry.],  entry into a joint venture, contracts exceeding [less than 5.] years,  involving a liability above [a relatively low threshold for the industry]  or outside the normal course of business of JD Credit, the appointment of  the managing director, the adoption of or any amendment to the business  plan or budget, borrowings exceeding a debt to equity ratio [a relatively  low threshold for the industry], any change in the nature of the business,  mergers, acquisitions and disposals. <ind> JD Credit will therefore be subject to joint control by JD Capital  and Lombard. <ind> Autonomous longlasting economic entity 7.<ind> JD Credit will perform all the functions normally carried out by  other entities operating in the same market. Its business hasuntil now  been operated by Farming and Agricultural Finance Ltd (United Kingdom)  (FAF), a subsidiary of Lombard. JD Capital and Lombard will commit  sufficient resources (including tangible and intangible assets and  personnel) to JD Credit, generally on an arm'slength basis and with the  option for JD Credit to obtain the resources from alternative sources. 8.<ind> JD Credit will not be dependent upon its parents for its business.  The notifying parties estimate that by the end of 1996 [a significant  proportion] per cent of the business of JD Credit will involve nonDeere  products. 9.<ind> The joint venture agreement provides that the joint venture will  have indefinite duration, subject to the right of either parent to  withdraw by giving one year's notice three years after its commencement. 10.<ind> JD Credit will therefore perform on a lasting basis all the  functions of an autonomous economic entity. <ind> Absence of coordination 11.<ind> Although the NatWest group will retain activities in the same  market as JD Credit (eg FAF will finance nonDeere agricultural equipment),  Deere has no other financing operations in the EEA. Deere's other  activities in the EEA, the manufacture of agricultural and other  machinery, do not overlap with any activity of the NatWest group. 12.<ind> There is thus no possibility of coordination between JD Capital  and Lombard or between companies in their corporate groups arising from  the joint venture. <ind> Conclusion 13.<ind> The operation accordingly constitutes a concentration within the  meaning of article 3(1)(b) of the Regulation. III.<ind> CONCENTRATION OF COMMUNITY DIMENSION 14.<ind> Deere and National Westminster have a combined aggregate  worldwide turnover in excess of 5000 million ECU. Each of them has a  Communitywide turnover in excess of 250 million ECU. [Deleted for  publication  the parties do not achieve more than twothirds of their  aggregate Communitywide turnover within one and the same Member State.] 15.<ind> The operation therefore has a Community dimension within the  meaning of article 1(1) of the Regulation. It does not qualify under the  EEA Agreement for cooperation with the EFTA Surveillance Authority. IV.<ind> COMPATIBILITY WITH THE COMMON MARKET 16.<ind> The operation combines complementary activities of Deere and the  NatWest group. There is thus no overlap between their activities and the  operation results in no horizontal increase in market shares. 17.<ind> The relevant product market in which JD Credit will be active can  be defined as the provision of financing leasing for agricultural  machinery, equipment and supplies and related equipment and machinery. JD  Credit will have less than [below 10.] per cent of this market in the  United Kingdom  The combined market share of FAF and JD Credit will also  be below [below 10.] per cent. On a narrower definition of the relevant  product market  financing leasing for agricultural machinery and equipment   JD Credit will have a market share of [below 10.] per cent and FAF and JD  Credit will have a combined share below 25 per cent. JD Credit will be in  competition with a variety of large and well established competitors,  including similar financing joint ventures or collaborations between  financial institutions and suppliers of agricultural machinery and  equipment, such as ING Bank/Case, Barclays/Fiat New Holland and  Rabobank/Massey Ferguson. In addition barriers to entry are low. V.<ind> ANCILLARY RESTRAINTS 18.<ind> The notifying parties have requested that certain provisions of  the agreement, if restrictions, be considered as ancillary to the  concentration. 19.<ind> The parties agree to use all reasonable efforts to keep  confidential concerning the business of JD Credit and the business of each  other for a period ending [not exceeding 5] years after the termination of  the joint venture ([not exceeding 10] years for certain Deere customer  lists). 20.<ind> Subject to existing activities the parties agree not to compete  with [Deleted for publication] or solicit customers of JD Credit for the  duration of the joint venture. This restriction, which reflects the  substantial withdrawal of the parties from the market of the joint  venture, does not apply to the NatWest groupexcept Lombard and its  subsidiaries. 21.<ind> Deere grants to JD Credit a nonexclusive license to certain trade  and service marks for the duration of the joint venture 22.<ind> In accordance with customary practice in the agricultural  machinery and equipment market Deere agrees for the duration of the joint  venture to provide exclusively to JD Credit subsidies intended to enable  it to offer attractive financing terms to prospective purchasers. If JD  Credit decides not to provide financing for a Deere product Deere will be  able to provide the subsidy to another finance company. 23.<ind> The parties will supply equipment and staff to JD Credit on a  nonexclusive arm'slength basis. JD Credit will be able to obtain these  resources elsewhere. 24.<ind> The provisions set out in paragraphs 19 and 23 contain no  restrictions.  The other provisions contain restrictions which are  necessary to guarantee the viability of JD Credit or are otherwise  directly related to and necessary for the successful implementation of the  concentration and can therefore be treated as ancillary to it. VI.<ind> CONCLUSION 25.<ind> For the foregoing reasons, the proposed concentration does not  raise serious doubts as to its compatibility with the common market and  with the functioning of the EEA Agreement. 26.<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