CELEX: 31996M0820
Language: en
Date: 1996-09-23 00:00:00
Title: Commission Decision of 23/09/1996 declaring a concentration to be compatible with the common market (Case No IV/M.820 - British Aerospace / Lagardère SCA) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31996M0820

Commission Decision of 23/09/1996 declaring a concentration to be compatible with the common market (Case No IV/M.820 - British Aerospace / Lagardère SCA) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 022 , 22/01/1997 P. 0006

 COMMISSION DECISION of 23/09/1996 declaring a concentration to be  compatible with the common market (Case No IV/M.820 - British Aerospace /  Lagardère SCA) 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.820  British Aerospace/Lagardère <ind> <ind> Notification of 21.08.1996 pursuant to Article 4 of Council  Regulation No 4064/89 1.<ind> On 21.08.1996 the Commission received a notification relating to  the proposed creation by British Aerospace plc (BAe) and Lagardère SCA  (Lagardère) of a joint venture in the areas of guided weapons and  associated weapons systems.  2.<ind> The products that BAe and Lagardère will each contribute to the  joint venture are used almost entirely in military applications. Certain  of the products currently manufactured by BAe and Lagradère also have  nonmilitary applications ("dual use products"). The United Kingdom and  France, relying upon Article 223(1)b of the EC Treaty, have instructed the  parties not to notify the military aspects of this operation. The  notification therefore relates only to the nonmilitary applications of the  dual use products of the joint venture.  3.<ind> After examination of the notification, 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. I.<ind> THE PARTIES 4.<ind> BAe operates in two principal business areas: defence and  commercial aircraft. Its defence business comprises military aircraft,  guided weapons, ordnance (guns and ammunition) and elements of naval  systems. Additionally BAe has a property development arm. 5.<ind> Lagardère SCA (Lagardère) operates in ten principal business  areas, comprising inter alia defence, space systems, telecommunications,  automobiles and transit systems and media. The guided missiles activities  of Lagardère are undertaken by its wholly owned subsidiary, Matra Défense  SA ("Matra Défense"). II.<ind> THE CONCENTRATION 6.<ind> The joint venture will be jointly controlled by Lagardère and  British Aerospace. Parity between the two parties will be ensured by 5050  voting rights and representation on an equal basis on the board of a Dutch  company responsible for the management of the business to be carried out  by a French holding company in which BAe and Lagardère will have an equal  share.  7.<ind> In particular, the proposed operation will involve the merger of  the parties' activities in the areas of guided weapons and associated  weapons systems in a new holding company, Matra BAe Dynamics S.A.S. ("the  Joint Company"). BAe and Lagardère will each have a 50% interest (less 1  share) in the Joint Company which will own 100% of the equity share  capital of the UK and French operating companies. The remaining two shares  will be held by a management company incorporated under Dutch law, Matra  BAe Dynamics B.V., owned 50% by BAe and 50% by Lagardère.  8.<ind> Matra BAe Dynamics B.V. will conduct the overall management of the  Joint Company in accordance with the strategic business plan and budget as  approved by its board, while the national operatingcompanies will be  responsible for the daytoday management of their businesses. 9.<ind> The joint venture will be provided with all financial and other  resources, including physical assets, staff, and intellectual property,  necessary for it to perform all the functions of an autonomous economic  entity. It will be established on an indefinite basis. 10.<ind> The parent companies will withdraw from the areas of business  being contributed to the joint venture [For historical reasons, the parent  companies accept only certain limited commitments with respect to the  relationship between their remaining businesses and the military business  being contributed to the joint venture.].  11.<ind> It is therefore concluded that the proposed operation will  constitute a concentration. III.<ind> COMMUNITY DIMENSION 12.<ind> The combined aggregate worldwide turnover of BAe and Lagardère  exceeds 5,000 million ECU (BAe = 6.927 million ECU, Lagardère = 8.058  million ECU). The aggregate Communitywide turnover of each of BAe and  Lagardère exceeds 250 million ECU (BAe = 2.578 million ECU; Lagardère =  6.117 million ECU). The parties do not achieve more than two thirds of  their Communitywide turnover in one and the same Member State. The  proposed operation has therefore a Community dimension. IV.<ind> APPLICATION OF ARTICLE 223(1)(b) OF THE EC TREATY 13.<ind> As already stated in paragraph 2 of this decision, the  notification received relates only to the nonmilitary activities of the  two parent companies as the governments of United Kingdom and France,  relying upon Article 223(1)(b) the EC Treaty, have instructed Bae and  Lagardère respectively not to notify information which relates to the  military activities of the two companies. 14.<ind> The Commission has considered the applicability of Article  223(1)(b) of the EC Treaty in the  present case.  In this context it has  noted, on the basis of the information provided by the Governments of the  United Kingdom and France, that: <ind> <ind> the part of the concentration which has not been notified only  relates to the production of or trade in arms, munitions and war material  which are mentioned in the list referred to in Article 223(2) EC; <ind> <ind> the measures taken by the United Kingdom and France are  necessary for the protection of the essential interests of their  security; <tab> <ind> there are no spillover effects from the military applications  on the nonmilitary applications of the dual use products of Bae and  Lagardère; <ind> <ind> the merger will have no significant impact on suppliers and  subcontractors of the undertakings concerned and on Ministries of Defence  of other Member States.  Furthermore, intermediate consumers in the sector  involved would be little affected. 15.<ind> Therefore, the Commission is satisfied with the measures taken by  the United Kingdom and France and sees no need to invoke Article 225(1).   The present decision is restricted to the nonmilitary applications of the  dual use products of Bae and Lagardère. IV.<ind> COMPATIBILITY WITH THE COMMON MARKET 16.<ind> As stated above, the assessment of this operation is limited to  the nonmilitary applications of the dual use products that will be  contributed to the joint venture. The parties' activities in relation to  these products are highly marginal: the turnover generated by the sale of  nonmilitary applications amounted to only ECU 8.1 m in 1995 (Lagardère=  ECU 7 m, BAe= ECU 1.1 m), that is less than 1% of the estimated total  turnover of the joint venture.  17.<ind> The dual use products that the parties will contribute to the  joint venture are for: precision optical engineering, including materials  processing for optical equipment; manufacture of control units for factory  automation robotics; design and manufacturing of space system structures,  mechanisms and antennae; environmental and electromagnetic testing for  some nondefence customers, mainly in the aerospace industry; electronics  and microelectronics applications, including printed circuit board  manufacturing and customised electronic circuitry packaging. 18.<ind> There is an overlap between the activities of BAe and Lagardère  only in the areas of environmental and electromagnetictesting, and of  electronics and microelectronics applications (i.e. in the area of  customised electronic circuitry packaging). In both areas BAe and  Lagardère are small players subject to competition from a range of  companies with similar facilites, skills and expertise. Moreover the  overlap of their activities is very small. As a result, the concentration  does not create or strengthen a dominant position, as a result of which  effective competition would be significantly impeded in the common market  or a significant part thereof. VI<ind> CONCLUSION 19.<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,