CELEX: 31995M0536
Language: en
Date: 1995-03-28 00:00:00
Title: COMMISSION DECISION of 28/03/1995 declaring a concentration to be compatible with the common market (Case No IV/M.536 - Torrington / NSK) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31995M0536

COMMISSION DECISION of 28/03/1995 declaring a concentration to be compatible with the common market (Case No IV/M.536 - Torrington / NSK) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 104 , 25/04/1995 P. 0007

 COMMISSION  DECISION of 28/03/1995 declaring a concentration to be compatible with the common market (Case No IV/M.536  - Torrington  /  Ingersoll) 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.536 TORRINGTON/NSK <ind>  <ind> Notification of  27.02.1995 pursuant to Article 4 of Council Regulation No4064/89 1.<ind>  The  above  mentioned  notification  concerns   the creation  of a joint venture between Torrington  UK  Limited (Torrington), a whollyowned subsidiary of the Ingersoll Rand Company  (Ingersoll), and NSK Bearings Europe  Limited  (NSK Europe), a whollyowned subsidiary of NSK Limited (NSK).  The new   company  which  will  be  called  NASTECH  EUROPE  LTD (Nastech) will be active in the manufacturing and  sales  of steering  column systems for installation in passenger  cars and light commercial vehicles. 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>  Torrington  is  a UKbased company  which  develops, manufactures, distributes and sells steering column  systems as  well as antifriction bearings. This last activity is not contributed to the joint venture. <ind>  4.<ind>  NSK  Europe  is a UKbased company  which  develops, manufactures, distributes and sells steering column systems. It  is also active in the ball and roller bearings business. This last activity is not contributed to the joint venture. II.<ind> THE OPERATION 5.<ind>  Torrington  and NSK Europe intend  to  establish  a joint   venture   that  will  research,   design,   develop, manufacture, sell and distribute steering column systems for use in passenger vehicles and light commercial vehicles. <ind>  The  parties will transfer to Nastech  all  of  their European  interest in the field of steering column  systems. Torrington's  steering column system  assets  are  currently owned  by  AS  Parts  Limited, a whollyowned  subsidiary  of IngersollRand. These assets will be contributed  to  Nastech by AS Parts Limited. III.<ind> CONCENTRATION 6.<ind> The joint venture will be of unlimited duration  and will be jointly controlled. Nastech will be owned equally by Torrington  and  NSK Europe. Nastech will be  managed  by  a Board of Directors composed of six members, two appointed by Torrington,  two appointed by NSK Europe. The remaining  two directors  will be appointed by majority vote of  the  Board and  will  be initially the Managing Director (appointed  by Torrington)  and the Deputy Managing Director (appointed  by NSK).  As  far  as decisions of fundamental  importance  are concerned,  the consent of a majority of directors  will  be necessary. The decisions refer in particular to the approval of the annual business plan or annual budget. 7.<ind>  The joint venture will be a full function  company. Torrington and NSK Europe will contribute to the venture all the  assets  necessary to research and develop,  manufacture and  sell complete steering column systems. Their respective employees   will  be  also  transferred  to   the   venture. Torrington  and  NSK Europe will, for the  duration  of  the venture,  grant Nastech [deleted; business secret]  licenses to  relevant  intellectual property. Moreover,  intellectual property  developed  within  the  venture  will  become  the venture's property. Torrington and NSK Europe will  for  the lifetime of the venture, each lease to the venture the  land and   buildingsassociated  with  their  respective  steering column  systems operations. Any services provided by  either NSK  or  Torrington at the request of the  venture  will  be provided on an arm's length basis. 8.<ind> No risk of coordination of the competitive behaviour of  the  parent companies is  expected on the basis  of  the following   elements.  Torrington's   and   NSK's   existing Europeanbased   steering  column   system   businesses   are concentrated in the venture. Neither Torrington nor NSK will remain  in the affected market, the geographic market  being defined  as Western European (as explained below).  Besides, Torrington  and  NSK formed a joint venture  in  1988.  This company is active in the field of steering column systems in the  United States of America, which constitutes a  separate geographic market. NSK will continue to manufacture steering columns in Japan. Any steering columns manufactured  by  NSK in  Japan that are subsequently imported into Europe will be marketed through the venture.  9.<ind>  Outside the venture, Torrington and NSK  will  each continue   to  manufacture  and  sell  bearings,  the   only component  of  a system which remains outside  Nastech.  NSK will  be  active  in  the  ball  and  roller  bearings   and Torrington  in  a  wide range of bearings,  including  ball, roller  and needle bearings. Bearings are used in a  variety of   engineered  products.  Amongst  others,  bearings   are installed  in steering column systems and they  account  for approximately  25%  of  a  steering  column  system's  total manufacturing costs, the percentage depending on the type of system.  Taking  into account the structure of  the  market, especially  the  broad range of end uses for  bearings,  the variety of customers of bearings (the steering column system producer  being  only one of them), and  the  low  value  of bearings  in  a steering column system's total manufacturing costs,  there is no appreciable risk of coordination between the parent companies. Moreover, the venture will be free  to source bearings from any manufacturer on the market. 10.<ind>  Nastech  will be therefore a concentration  within the meaning of Article 3 of Council Regulation No. 4064/89. IV.<ind> COMMUNITY DIMENSION 11.<ind>  The  combined worldwide turnover of Ingersoll  and NSK  exceeds  ECU  5  billion  and  they  have  each  ECwide turnovers  in  excess of ECU 250 million. Neither  Ingersoll nor  NSK  have  more than twothirds of their  respective  EC turnovers in one and the same Member State. V.<ind> MARKET DEFINITION A)<ind> RELEVANT PRODUCT MARKET 12.<ind> The product market here involved is the market  for steering  column  systems, installed in passenger  cars  and light  commercial vehicles. The steering column is the  link between the steering wheel and the vehicle wheels and allows drivers  to  direct their vehicle in the desired  direction. Torrington and NSK manufacture several variants of the  same basic   steering  column  system:  rigid  steering   column, telescopic  steering  column, tilt and  telescopic  steering column,  neck  tilt steering column. All of these  types  of steering column are generally required to absorb energy upon vehicle  impact. They are also all designed for use with  an air  bag.  These  variants, in view of the  fact  that  they satisfy  similar needs, are considered to form part  of  the same product market.  13.<ind>  Steering column systems can be sold as a  complete system  or as subassemblies or as components which  will  be purchased either by the assembler of the steering column  or directly by the automotive manufacturer. It is not necessary to  decide whether these different segments of the  steering column systems business constitute different product markets or  one  single  market as claimed by the notifying  parties because  in  this particular case, it does  not  change  the Commission's assessment as far as dominance is concerned. B) <tab> GEOGRAPHIC MARKET 14.<ind>  The  geographical  dimension  of  this  market  is WesternEurope.  There are no barriers to  crossborder  trade such  as  local  brand names, governmental regulations.  The average transport costs across Europe are estimated  by  the parties  to  represent only around 3% of  sales  value.  All competitors  are active in most Member States  where  a  car industry exists. 15.<ind>  The  geographic dimension of  the  market  remains essentially  westerneuropean and cannot be  enlarged  up  to now.  The  level  of  imports  are  estimated  to  represent approximately  10%  of  total  western  european  sales   of steering  column systems. This situationcan be explained  by the  EC tariffs imposed on steering column systems which are currently set at 6,9%, by the level of transportation  costs for  exports  outside Europe which amount  approximately  to 10%,  by  the presence within the territory of many  western european producers. VI.<ind> ASSESSMENT 16.<ind>   On   the  basis  of  the  abovementioned   market definition,  e.g.  the  Western  European  market  for   the production   and  sales  of  steering  column  systems   for passenger  cars and light commercial vehicles, the  addition of  market  shares  between the notifying parties  will  not exceed  20% after completion of the operation (in 1994,  the market  shares  in  terms  of volumes  were  the  following: Torrington: [less than 10%]; NSK Europe:  [less  than  10%]; Total:[less than 20%]). 17.<ind>  Strong competitors are active in this market  with higher  market  shares  than those  of  the  expected  joint venture: NACAM [2530%], ECIA [2025%] , SAG [1520%]. <ind>   The   parties'  main  customers   are   strong   car manufacturers: Nissan and Toyota for NSK Europe and Ford and Rover for Torrington. <ind>  Lastly,  it  should be taken  into  account  for  the assessment  that  half  of  the needs  for  steering  column systems is satisfied by inhouse supplies. 18.<ind>  As  far  as components are concerned,  Torrington, carrying  out   [deleted  business  secret]  of  its   total turnover  in component sales, has an estimated market  share in Western Europe of approximately  [less than 20%], NSK, of which  the  sales  of  components only  represent  [deleted, business  secret]  of its total turnover, has  an  estimated market share in Western Europe of approximately  [less  than 5%].   The  main competitors in the production and  sale  of complete  systems such as NACAM or ECIA, are also active  in the component or subassembly segments. 19.<ind>  The  operation  will not  therefore  lead  to  the creation  of a dominant position in the Western  market  for the  production  and  sale of steering  column  systems  for passenger cars and light commercial vehicles. VII.<ind> CONCLUSION 20.<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. <tab> For the Commission,