CELEX: 31995M0573
Language: en
Date: 1995-04-11 00:00:00
Title: COMMISSION DECISION of 11/04/1995 declaring a concentration to be compatible with the common market (Case No IV/M.573 - ING / Barings) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31995M0573

COMMISSION DECISION of 11/04/1995 declaring a concentration to be compatible with the common market (Case No IV/M.573 - ING / Barings) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 114 , 06/05/1995 P. 0006

 COMMISSION  DECISION of 11/04/1995 declaring a concentration to  becompatible with the common market (Case No IV/M.573  - ING  /  Barings)  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 party Dear Sirs, Subject :<tab> Case No. IV/M.573  ING/BARINGS <ind> <ind> <ind> Notification of 14 March 1995 pursuant  to Article 4 of Council Regulation N  4064/89 1.<ind> <ind> This notification concerns the acquisition  of substantially  all  the  assets and  liabilities  of  Baring Brothers & Co. Limited, including all the Baring Brothers  & Co.  Limited subsidiaries except Baring Securities  Limited; all  the  Baring  Securities  Limited  subsidiaries  (except Baring  Futures (Singapore) Pte Limited); and, Baring  Asset Management  Holdings  and  all its subsidiaries,  which  are collectively  referred to as "Barings" in this decision,  by subsidiaries   of   Internationale  Nederlanden   Groep   NV ("ING"). 2.<ind>  <ind>  After  examination of the  notification  the Commission  has concluded that the proposed operation  falls within  the scope of Council Regulation No 4064/89 and  does not give rise to serious doubts as to its compatibility with the common market and the EEA Agreement. I<tab> <ind> THE PARTIES 3.<ind> <ind> ING is a worldwide organization, with its base and   origins  located  in  the  Netherlands,   offering   a comprehensive  range  of  financial products  and  services, including but not limited to banking and insurance. 4.<ind> <ind> Barings plc, the holding company of the assets acquired  by  ING,  together with certain subsidiaries,  was placed   in  administration,  within  the  meaning  of   the Insolvency Act 1986 on 27 and 28 February 1995. 5.<ind>  <ind>  Barings  is  involved  in  merchant  banking activities, including investment banking, corporate banking, venture capital and capital markets operations together with securities trading and asset management.  Whilst Barings  is predominantly  UK  based  it  has  a  worldwide  sphere   of operations. II<tab> <ind> THE OPERATION 6.<ind>   <ind>   The   proposed  operation   concerns   the acquisition,  by  ING,  of Barings,  together  with  Barings Securities (Japan) Limited, from their administrators.  This involves  the assumption of certain liabilities  of  Barings together with the recapitalisation of the new group owned by ING. 7.<ind>  <ind> The Commission granted a derogation,  on  the basis  of  Article  7(4),  on  6  March  1995  whereby   the suspensive    effect   of   the   Merger   Regulation,    on concentrations  with a community dimension,  was  waived  in relation  to this operation.  This was necessary  given  the need  to effect a rapid completion of the operation in order to prevent serious damage to Barings and third parties. III<ind> <tab> CONCENTRATION 8.<ind>   <ind>   Whilst   Barings   plc   was   placed   in administration  on  27  and  28 February  1995  and  control therefore passed to the administrators, this transaction did not form a concentration by virtue of Article 3(5)(b). 9.<ind>  <ind> As the result of the operation ING will  have sole  control  of  Barings  and Barings  Securities  (Japan) Limited   and  consequently  the  operation  constitutes   a concentration within the meaning of Article 3 of the  Merger Regulation. IV<tab> <ind> COMMUNITY DIMENSION 10.<ind>  Based on audited financial statements the parties' combined   aggregate  worldwide  turnover,   calculated   in accordance  with  Article  5(3),  is  more  than  ECU  5,000 million;  in addition, the aggregate Communitywide  turnover of both ING and Barings exceeds ECU 250 million. 11.<ind>  Moreover, neither undertaking achieves  more  than twothirds of its Communitywide turnover within one  and  the same  Member  State.   The  concentration  therefore  has  a Community dimension. V<tab> <tab> COMPATIBILITY WITH THE COMMON MARKET <tab> <tab> Relevant product market 12.<ind>  The parties have notified that they operate  in  a number   of  product  areas  which  they  identify  as   the following: retail banking, private banking, venture capital, corporate banking, investment banking, foreign exchange  and money  market trading, securities' issuing and trading which may  be  subdivided  into equities,  derivatives  and  fixed income instruments and asset management. 13.<ind>  The Commission, in earlier decisions, has  already identified a number of areas in which banks operate:  retail banking  [IVM.391   BAI/Banca Popolare di Lecco],  corporate banking  [IV/M.213   Hong  Kong &  Shanghai  Bank/Midland.], investment    banking   [IV/M.319    BHF/CCF/Charterhouse.], foreign  exchange trading [IV/M.319  BHF/CCF/Charterhouse.], asset  managemen [IV/M.357  Commerzbank/CCR.]t, money market trading    [IV/M.319    BHF/CCF/Charterhouse.],   derivative trading    [IV/M.319    BHF/CCF/Charterhouse.],   securities trading [IV/M.357  Commerzbank/CCR.] and bond and commercial paper   issues   and  facilities  [IV/M.069    Kyowa/Saitama Banks.].  For the purposes of the present case, however,  it is  not necessary to provide a definitive conclusion on  the relevant  product  market  since,  on  the  basis   of   the assessment set out below, a dominant position would  not  be created  or reinforced even on the narrowest product  market definition. <tab> <tab> Relevant geographic market 14.<ind>  It  is  considered that certain services  such  as retail banking [IV/M.391  BAI/Banca Popolare di Lecco]  and, to   a   certain   extent,  investment   banking   [IV/M.319 BHF/CCF/Charterhouse.] are limited to national  or  regional boundaries.   These  limitations are due to  local  language preferences  and business cultures and, for retail  banking, the  fact that generally individual customers make use of  a local branch of a bank. 15.<ind> More generally, financial markets, are in principle international  in  scope  and  the  Commission  has  already concluded  that  "money  markets trading,  foreign  exchange trading  and  derivative  trading  [are]  activities   whose geographic scope is international and are part of the normal business  of  any  bank."  [IV/M.319   BHF/CCF/Charterhouse] Nevertheless  services are often provided  through  national outlets  to  local clients. For the purposes of the  present case,  however, it is not necessary to provide a  definitive conclusion on the relevant geographic market since,  on  the basis  of  the assessment set out below, a dominant position would  not  be  created or reinforced even on the  narrowest geographic market definition. <ind> <ind> Assessment 16.<ind>  In order to gauge the magnitude of the  operation, the  impact of the acquisition of Barings on ING's  position in a table of world rankings has been calculated.  According to  a survey published in The Banker in July 1994, and based on  core  capital, as defined by the Bank for  International Settlements,  ING is ranked number 15.  As a result  of  its acquisition of Barings ING's position is unchanged.  If  the core  capital  of  ING  Bank, the ING banking  subgroup,  is employed instead, ING Bank's ranking improves from number 74 to   63  as  the  result  of  the  acquisition  of  Barings. Therefore it is clear that the operation does not appear  to change the overall relative position of the undertakings. 17.<ind>  In  general the two undertakings are complementary by  way  of  operation and geographic spread.  There  is  no appreciable overlap in any Member State in each of the areas concerned  by  the  merger,  a fact  which  is  demonstrated below: <tab>  <tab> <ind> retail banking : Barings does not have  a retail   banking   business  whilst  ING's  operations   are predominantly in the Netherlands; <tab>  <tab> <ind> private banking : Barings has principally UK  clients as customers for this service which is  provided through  its  offices  in Guernsey and  Switzerland.   ING's operations  are  directed towards Dutch individuals  in  the Netherlands, Far East and Latin America; <tab>  <tab> <ind> venture capital : Barings is one of  some 60  venture  capital fund managers in the UK and  serves  UK companies.  ING operates predominantly in the Netherlands; <tab>  <tab>  <ind>  corporate banking  :  Barings  provides services  to  UK companies whilst ING serves  Dutch  clients located both in the Netherlands and overseas; <tab> <tab> <ind> investment banking : Barings' business  is both  in developed and emerging markets: in the former about 75%  of  itsincome is derived in the UK and  the  rest  from other  European  countries;  for  emerging  markets  50%  of Barings' income is derived from Asia and a further 25%  from Latin  America.   ING's activities in  this  area  are  very limited and confined to the Netherlands; <tab>  <tab> <ind> foreign exchange and money market trading :  Barings' business is confined to acting on behalf  of  UK clients; ING is itself active on the international markets; <tab> <tab> <ind> securities' trading: <tab> <tab> <ind> equities :<ind> <ind> Barings provides  an international  service,  largely on  behalf  of  US  and  UK clients,  for investment in markets outside the  US  or  UK. ING  trades  principally Dutch equities on behalf  of  Dutch clients in the Netherlands. <tab>  <tab> <ind> derivatives :<ind> although both ING  and Barings  are active in derivatives trading their  activities are   focused  on  various  instruments  in  a   number   of international   locations.   Therefore  neither   party   is considered  to  have a significant share of trading  on  any exchange. <tab>  <tab>  <ind> fixed income :<ind> Barings  is  a  very small  player in the fixed income bond markets; on the other hand ING's market activities are centred principally in  the New  York and Sao Paulo markets for Latin American debt  and London for European debt. <tab>  <tab>  <ind> asset management : nearly  half  of  the assets  managed  by  Barings  are  for  UK  clients  with  a negligible  amount under management for Dutch  undertakings. ING's  activities are focused on Dutch clients and  invested in Dutch equities and bonds. 18.<ind> The Commission has contacted a number of the merged entity's  competitors  operating in  both  the  banking  and securities'  trading businesses.  To the extent that  either banking  or  securities'  trading may  be  international  in scope,  in areas where an overlap occurs, ING/Barings  would not have a market share of any significance. 19.<ind>  In  view of the market shares resulting  from  the concentration  and  the  structure of  the  various  markets concerned,  the  operation will not create or  strengthen  a dominant  position  such as to impede effective  competition within the common market. VI<ind> <ind> CONCLUSION 20.<ind>   Based  on  the  above  findings,   the   proposed transaction  does  not  raise  serious  doubts  as  to   its compatibility with the common market. <ind>  <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