CELEX: 32018M8949
Language: en
Date: 2018-08-06 00:00:00
Title: Commission Decision of 06/08/2018 declaring a concentration to be compatible with the common market (Case No COMP/M.8949 - Tenneco Inc. / Federal-Mogul LLC) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
  In the published version of this decision, some               Brussels, 06.08.2018
  information has been omitted pursuant to Article              C(2018) 5463 final
  17(2) of Council Regulation (EC) No 139/2004
  concerning non-disclosure of business secrets and
  other confidential information. The omissions are
  shown thus […]. Where possible the information
  omitted has been replaced by ranges of figures or a                   PUBLIC VERSION
  general description.
                                                               To the Notifying Party
Subject:            Case M.8949 – Tenneco / Federal Mogul
                    Commission decision pursuant to Article 6(1)(b) of Council
                    Regulation No 139/20041 and Article 57 of the Agreement on the
                    European Economic Area2
Dear Sir or Madam,
(1)         On 3 July 2018, the European Commission received notification of a proposed
            concentration pursuant to Article 4 of the Merger Regulation by which Tenneco
            Inc. ("Tenneco", USA) acquires within the meaning of Article 3(1)(b) of the
            Merger Regulation sole control of the whole of Federal-Mogul ("FDML",
            USA).3 Tenneco and FDML are designated hereinafter as the "Parties", and
            Tenneco individually as the "Notifying Party".
1.        THE PARTIES
(2)         Tenneco manufactures and distributes components for motor vehicles, in
            particular clean air and ride performance products, for both original equipment
1    OJ L 24, 29.1.2004, p. 1 (the 'Merger Regulation'). With effect from 1 December 2009, the Treaty on
     the Functioning of the European Union ('TFEU') has introduced certain changes, such as the
     replacement of 'Community' by 'Union' and 'common market' by 'internal market'. The terminology of
     the TFEU will be used throughout this decision.
2    OJ L 1, 3.1.1994, p. 3 (the 'EEA Agreement').
3    Publication in the Official Journal of the European Union No C 243, 11.07.2018, p. 11.
Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE
Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË
Tel: +32 229-91111. Fax: +32 229-64301. E-mail: COMP-MERGER-REGISTRY@ec.europa.eu.
 ---pagebreak---           manufacturers ("OEM") and the repair and replacement independent
          aftermarkets ("IAM") worldwide.
(3)       Federal-Mogul manufactures and supplies components for motor vehicles, rail
          and other applications, in particular engine, transmission and driveline
          components as well as brake friction material, chassis components, sealing
          components and wiper products worldwide.
2.      THE OPERATION
(4)       Under the terms of the Membership Interest Purchase Agreement, dated 10
          April 2018, Tenneco will acquire all of the issued and outstanding membership
          interests of FDML ("the Transaction").
3.      THE CONCENTRATION
(5)       The Transaction represents an acquisition of sole control within the meaning of
          Article 3(1)(b) of the Merger Regulation by Tenneco over FDML.
4.      EU DIMENSION
(6)       The undertakings concerned have a combined aggregate world-wide turnover of
          more than EUR 5 000 million4 (Tenneco: 8 207 million, Federal-Mogul: EUR 6
          968 million). Each of them has an EU-wide turnover in excess of EUR 250
          million (Tenneco: EUR […] million, Federal-Mogul: EUR […] million), but
          they do not achieve more than two-thirds of their aggregate EU-wide turnover
          within one and the same Member State.
(7)       The notified operation therefore has an EU dimension within the meaning of
          Article 1(2) of the Merger Regulation.
5.      MARKET DEFINITION
(8)       The Transaction involves the manufacturing and supply of various automotive
          components sector where both Parties are active.
        Market for the manufacturing and supply of automotive components
     5.1.    Product market definition
(9)       The Commission has in the past defined the manufacturing and supply of
          automotive components as a separate product market on a product-by-product
          basis (each individual automotive component constituting a separate product
          market).5
4   Turnover calculated in accordance with Article 5 of the Merger Regulation and the Commission
    Consolidated Jurisdictional Notice.
5   See e.g. Case COMP/M.8198 – Alliance Automotive Group/ FPS Distribution (belts); Case
    COMP/M.7420 – ZF / TRW (chassis components, shock absorbers, steering components and others);
                                                    2
 ---pagebreak--- (10)       The Commission has further segmented the relevant markets by reference to: (i)
           the vehicles for which the product is supplied, distinguishing between (a)
           components for light vehicles (“LVs”), including passenger cars and light
           commercial vehicles, and (b) heavy commercial vehicles (“HCVs”)6, and (ii) the
           distribution channel to which the product is supplied, distinguishing between (a)
           products for the OEM, including products for the original equipment services
           ("OES"), and (b) products for the IAM.7
(11)       The Parties do not contest the Commission's case practice which is therefore
           retained for this case. With regard to all product markets except bushings, axial
           joints and strut mounts (which were not part of the precedent), the market
           definitions considered in the present case are the same narrowest plausible
           relevant market definitions that were considered in COMP/M.7420 - ZF/ TRW,
           the most relevant precedent with regard to the products subject to this
           Transaction. On this basis, the Parties submit that the Transaction leads to
           affected markets only on the following eight product markets:8
         Control arms for LVs in the IAM
(12)       Control arms are connecters, which attach to a vehicle’s rigid frame, i.e. chassis
           at one end and the wheel at the other. Control arms “control” the up and down
           movement of a vehicle’s wheels, for example when the vehicle goes over a
           bump on the road surface. They allow the wheel to move up and down while
           preventing forward and rearward movement, and supporting the vehicle against
           braking and cornering forces.
         Ball joints for LVs in the IAM
(13)       Suspension ball joints form part of the connection between the wheels of a
           vehicle and the chassis. Suspension ball joints allow a wheel to pivot during
           turning, while remaining securely fixed to the vehicle’s chassis. Suspension ball
           joints are connected to control arms, which are connected to the chassis frame.
         Bushings for LVs in the IAM
(14)       A bush or bushing provides an interface between two parts, damping the energy
           transmitted through the bushing. A common application is in vehicle suspension
           systems, where a bushing made of rubber (or, more often, synthetic rubber or
           polyurethane) separates the faces of two metal objects while allowing a certain
           degree of movement.
   Case COMP/M.7400 – Federal-Mogul Corporation/ TRW Engine Components (engine valves); Case
   COMP/M.4456 Mahle/ Dana EPG (connecting rod bearings and pistons rings); COMP/M.3972 - TRW
   Automotive / Dalphi Metal Espana (airbags and steering wheels); COMP/M.2535, Sogefi / Filtrauto
   (filters); COMP/M.2939, JCI / Bosch / VB Autobatterien JV (starter batteries).
6  See e.g. Case COMP/M.8198 – Alliance Automotive Group/ FPS Distribution; Case COMP/M.7400 –
   Federal-Mogul Corporation/ TRW Engine Components.
7  See e.g. Case COMP/M.8198 – Alliance Automotive Group/ FPS Distribution; Case COMP/M.7420 -
   ZF/ TRW, Case COMP/M.7400 – Federal-Mogul Corporation/ TRW Engine Components.
8  With regard to all product markets except bushings, axial joints and strut mounts (which were not part
   of the precedent), the market definitions considered in the present case are either the same narrowest
   plausible relevant market definitions that were considered in COMP/M.7420 - ZF/ TRW or even
   narrower.
                                                       3
 ---pagebreak---         Tie rod ends for LVs in the IAM
(15)      Tie rod ends (also referred to as “outer tie rods”) are the connection between the
          axial joint and the wheels, transmitting force from the steering gear, which
          amplifies the steering command received from the driver’s wheel, to the steering
          knuckle or hub upon which the wheel is mounted. It is one of the major pivots in
          the steering system, causing the wheels to turn.
        Axial joints for LVs in the IAM
(16)      Axial joints (also referred to as “inner tie rods” or “axial rods”) are steering
          parts that form the connection between the steering rack/gear and tie rod end.
          They transmit axial forces to the tie rod end and allow the wheels to turn.
        Complete tie rods for LVs in the IAM
(17)      Tie rods are rigid connectors forming the link between the individual wheels and
          the steering control mechanism. A conventional tie rod is essentially straight,
          and has ball joints at each end. Tie rods are responsible for transferring steering
          commands to the wheels and ensuring that the wheels turn together.
        Stabiliser links for LVs in the IAM
(18)      Stabiliser links connect wheels on opposite sides of a vehicle and force the
          wheels and suspension to rise or fall to roughly the same height when cornering.
          This ensures that the sides of the vehicle move up and down together, instead of
          independently (i.e., “swaying”), which could compromise a vehicle’s handling
          and stability.
        Strut mounts for LVs in the IAM
(19)      Strut mounts attach the suspension strut to the body of the vehicle. Strut mounts
          are rubber-metal components that connect the strut to the vehicles chassis,
          whilst also insulating against the noise and vibrations from the wheels. The strut
          mount includes a bearing, which allows the shock absorber to rotate, as the
          wheels of the vehicle are turned. The bearing also enables spring rotation during
          normal suspension movements and transmits suspension loads to chassis. A strut
          performs two main functions: a shock damping function like shock absorbers
          and in addition, struts provide structural support for the vehicle’s suspension.
     5.2.    Geographic market definition
(20)      The Commission has in the past concluded that the market for the manufacture
          and supply of individual automotive components for the IAM was at least
          national (with a possible trend to EEA-wide markets).9
(21)      The Parties argue that the market for the manufacture and supply of individual
          automotive components in the IAM is increasingly EEA-wide, because of low
          transportation costs, global supply relationships, increasing centralised
          purchasing by customers and a 'one-stop-shop' for homologation in the EEA.
9  See e.g. Case COMP/M.8198 – Alliance Automotive Group/ FPS Distribution; COMP/M.7420 - ZF/
   TRW. As an exception, for plastic front and rear bumpers, the geographic scope was defined as
   regional (COMP/M.7893 – Plastic Omnium/Faurecia Exterior Automotive Business).
                                                   4
 ---pagebreak---           However, the Parties submit that in any event the precise market definition can
          be left open in the absence of any meaningful overlaps.
(22)      The Commission considers that it is not needed to conclude on geographic
          market definition for the IAM market as the Transaction will not generate
          competition concerns under any plausible market definition.
6.      COMPETITIVE ASSESSMENT
        Horizontal: non coordinated effects
(23)      While both Parties are active on the manufacturing and supply of various
          automotive components sector, the Parties have to large extent complementary
          product portfolios in the EEA. The Transaction only leads to horizontally
          affected markets in the manufacturing and supply of automotive components for
          LVs in the IAM when considering national markets. On EEA-wide markets, the
          Transaction would not lead to any affected markets, as the combined market
          shares of the Parties would remain below 20% on any product market.10
(24)      Tenneco's main activities focus on clean air11 and ride performance12 products;
          FDML's main activities focus on powertrain13 and motorpart14 products. In the
          EEA, each of the Parties is active in the supply in the IAM of: (i) suspension
          products for LVs; (ii) steering products for LVs and (iii) strut mounts for LVs.
(25)      Although the Transaction is largely complementary, the Transaction gives rise
          to the following 37 affected national markets in the EEA based on 2017 market
          share data.15
10 In accordance with Annex 1 to the Implementing Regulation (EC) No. 802/2004, Section 6.3.
11 Tenneco designs, manufactures and distributes a variety of exhaust system products and systems
   designed to reduce pollution and optimise engine performance, acoustic tuning and weight.
12 Ride performance products primarily comprise advanced suspension technologies that deliver
   performance, comfort and power to vehicles.
13 FDML main products in the powertrain segment including pistons, piston rings, cylinder liners, valve
   seats and guides, engine valves, bearings, bushings and washings, ignition products, seals and gasket
   heat shields.
14 FDML main products of FDML’s Motorparts division are brake pads, brake lining, brake blocks,
   chassis parts, driveline universal joints, gaskets and seals wipers, filters engine components ignition
   products and lighting products.
15 For several product markets in Belgium, the Parties also provided adjusted market shares, reflecting
   their understanding that some Belgian distributors would re-export to other Member States. However,
   for the purpose of this assessment, the demand side consists of distributors based in Belgium.
   Therefore, this Decision relies only on non-adjusted market shares in Belgium.
                                                        5
 ---pagebreak---  ---pagebreak---  ---pagebreak---  ---pagebreak---  ---pagebreak---  ---pagebreak---  ---pagebreak---           supply of ball joints for LVs in the IAM in Belgium and Estonia; the markets for
          manufacturing and supply of bushings for LVs in the IAM in Belgium and
          Ireland; the market for manufacturing and supply of tie rod ends for LVs in the
          IAM in Estonia; the markets for manufacturing and supply of axial joints for
          LVs in the IAM in Belgium, Estonia and Malta; the markets for manufacturing
          and supply of stabilizer links for LVS in the IAM in Belgium and Estonia; and
          the markets for manufacturing and supply of strut mounts for LVs in the IAM in
          Belgium, France, the Netherlands and Poland, the Transaction results only in a
          minor increment of less than [0-5]% in the Parties combined market share
          resulting in an insignificant increase in market concentration. In this respect, the
          Commission notes that in Belgium, where in some product markets either
          FDML or Tenneco already has a strong market position, the increment brought
          by Tenneco, respectively FDML, is de minimis with less than [0-5]%. These de
          minimis increments also apply to all affected national markets with regard to the
          manufacturing and supply of bushings for LVs in the IAM and the
          manufacturing and supply of strut mounts for LVs in the IAM.
(28)      According to the information available to the Commission, the Transaction does
          not involve a potential or recent entrant in any of the markets, nor could one of
          the Parties be considered as an important innovator. The Commission is also not
          aware of any significant cross-shareholdings of the market participants in any of
          the markets, nor of the fact that one of the Parties can be considered a maverick
          firm with a high likelihood of disrupting coordination in any of these markets or
          any past or ongoing coordination or facilitating practices in any of the markets.
          This appears to be confirmed by the stated rationale of the Transaction which is
          based on the complementarity of the Parties' businesses, to be re-arranged in two
          businesses, one focusing on aftermarket and ride performance18 and one
          focusing on powertrain technology19.
(29)      As such, this already gives an indication that competition concerns are unlikely
          to arise from the Transaction in 23 markets20 which comprise the product
          markets concerning the manufacturing and supply of strut mounts, ball joints,
          bushings and stabiliser links, all for LVs in the IAM, and all other affected
          product markets in the Member States mentioned above.21
18 Combining Tenneco's ride performance business and FDML's motorpart business.
19 Combining Tenneco's clean air business and FDML's powertrain business.
20 These markets are: for markets for manufacturing and supply of control arms for LVs in the IAM in
   Belgium, Estonia, Hungary, Italy and Portugal; the markets for manufacturing and supply of ball joints
   for LVs in the IAM in Belgium, Estonia and Hungary; the markets for manufacturing and supply of
   bushings for LVs in the IAM in Belgium and Ireland; the markets for manufacturing and supply of tie
   rod ends for LVs in the IAM in Estonia and Hungary; the markets for manufacturing and supply of
   axial joints for LVs in the IAM in Belgium, Estonia and Malta; the market for manufacturing and
   supply of complete tie rods for LVs in the IAM in Poland; the markets for manufacturing and supply
   of stabilizer links for LVS in the IAM in Belgium, Estonia and Hungary; and the market for
   manufacturing and supply of strut mounts for LVs in the IAM in Belgium, France, the Netherlands and
   Poland.
21 The Commission notes that in this context, it applied recital 32 of the Merger Regulation, as well as
   paragraph 6 of the Commission Notice on a simplified procedure for treatment of certain
   concentrations under Council Regulation (EC) No 139/2004 and paragraph 19 and 20 of the
   Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of
   concentrations between undertakings, in order to conclude that competition concerns appear unlikely
   in relation to these markets.
                                                      12
 ---pagebreak--- (30)     The Commission further observes that in all these 23 markets large competitors
         are active, including ZF Group, Sidem, Delphi and Febi Bilstein which are
         active on almost all or most of the affected markets.
(31)     In addition, in none of the affected markets both Parties are among the 4 largest
         suppliers, only one of the Parties is amongst the 4 largest suppliers on each
         market. The only exception is Hungary in the manufacturing and supply of
         control arms and stabiliser links.22
(32)     For these reasons, the Commission considers that the Transaction does not raise
         serious doubts as to its compatibility with the internal market on the following
         23 affected markets:
            a. manufacturing and supply of control arms for LVs in the IAM in Belgium,
                 Estonia, Hungary, Italy and Portugal;
            b. manufacturing and supply of ball joints for LVs in the IAM in Belgium,
                 Estonia and Hungary;
            c. manufacturing and supply of bushings for LVs in the IAM in Belgium,
                 and Ireland;
            d. manufacturing and supply of tie rod ends for LVs in the IAM in Estonia,
                 and Hungary;
            e. manufacturing and supply of axial joints for LVs in the IAM in Belgium,
                 Estonia and Malta;
            f. manufacturing and supply of complete tie rods for LVs in the IAM in
                 Poland;
            g. manufacturing and supply of stabiliser links for LVs in the IAM in
                 Belgium, Estonia and Hungary, and
            h. manufacturing and supply of strut mounts for LVs in the IAM in Belgium,
                 France, the Netherlands, and Poland.
(33)     The remaining 14 affected markets, the markets for manufacturing and supply of
    control arms for LVs in the IAM in France and Malta; the market for manufacturing
    and supply of ball joints for LVs in the IAM in France, Malta and Poland; the
    markets for manufacturing and supply of tie rod ends for LVs in the IAM in France,
    Malta and Poland; the markets for manufacturing and supply of axial joints for LVs
    in the IAM in France and Poland; the market for manufacturing and supply of
    complete tie rods for LVs in the IAM in France; and the markets for manufacturing
22 However, both the market for manufacturing and supply of control arms and the market for
   manufacturing and supply of stabiliser links in Hungary are only marginally affected with combined
   market shares of the Parties of [20-30]% and [20-30]% respectively. In both markets large competitors
   are active, in particular ZF Group ([10-20]%, respectively [10-20]%), Febi Bilstein ([5-10]%,
   respectively [10-20]%), Meyle ([5-10]%, respectively [5-10]%) and Ruville ([5-10]%, respectively [5-
   10]%).
                                                      13
 ---pagebreak---     and supply of stabiliser links for LVs in the IAM in France, Malta and Poland are
    further discussed below in sections 6.2 to 6.7.
     6.2.    Manufacturing and supply of control arms for LVs in the IAM in France
             and Malta
             6.2.1.   France
(34)      According to the Parties, the French market of control arms for LVs in the IAM
          is the third largest in the EEA, behind Germany and Italy, and in 2017
          accounted for approximately 14% of the total value of control arms for light
          vehicles sold in the EEA. Therefore, competition to win key supply contracts in
          France is strong. The Commission has no indication that this Transaction would
          significantly reduce such competitive pressure.
(35)      On the market for control arms for LVs in the IAM in France, the Parties have a
          combined market share of [30-40]% by value and [20-30]% by volume, with
          FDML having a market share of [20-30]% by value and volume and Tenneco of
          [5-10]% by value and [5-10]% by volume.
(36)      It appears that the transaction will result in the elimination of the fifth market
          player. It will not alter materially the structure of competition on the market.
          The Commission considers that the merged entity faces significant competition
          from several competitors that will remain on the market post-Transaction and
          are capable of imposing competitive constraints on the Parties. In particular
          Delphi has a market share of [20-30]%, the ZF Group a market share of [10-
          20]% and Sidem a market share of [10-20]%, and Febi Bilstein is also active
          with a [0-5]% market share.
(37)      On the basis of the above and all available evidence, the Commission considers
          that the Transaction does not raise serious doubts as to its compatibility with the
          internal market with regard to the manufacturing and supply of control arms for
          LVs in the IAM in France.
             6.2.2.   Malta
(38)      The Parties submit that Malta is the second smallest market in the EEA for the
          supply of control arms for light vehicles to the IAM as by value, sales made in
          Malta constitute just 0.06% of total EEA sales 2017 and that in small EEA
          Member States, such as Malta, market shares have a tendency to vary
          considerably depending on the outcome of the most recent round of contracting.
(39)      On the market for control arms for LVs in the IAM in Malta, the Parties have a
          combined market share of [20-30]% by value and [30-40]% by volume, with
          FDML having a market share of [20-30]% by value and volume and Tenneco of
          [0-5]% by value and [5-10]% by volume.
(40)      It appears that the transaction will result in the elimination of the fifth market
          player. It will not alter materially the structure of competition on the market.
          The Commission considers that significant competitive pressure will remain in
          the market of Malta post-Transaction. Key competitors of the Parties for the
                                                 14
 ---pagebreak---           supply of control arms in Malta include in particular the ZF Group, with
          estimated market shares of approximately [30-40]%, equivalent to the combined
          market share of the Parties post-Transaction. Other key competitors in Malta
          include Febi Bilstein with a market share of [5-10]%, Nipparts with a market
          share of [5-10]% and OCAP with a market share of [0-5]%. The remainder of
          the market for control arms for light vehicles to IAM customers in Malta is
          supplied by other players.23
(41)      On the basis of the above and all available evidence the Commission considers
          that the Transaction does not raise serious doubts as to its compatibility with the
          internal market with regard to the manufacturing and supply of control arms for
          LVs in the IAM in Malta.
     6.3.    Manufacturing and supply of ball joints for LVs in the IAM in France,
             Malta and Poland
             6.3.1.    France
(42)      The Parties argue that the French market for manufacturing and supply of ball
          joints for LVs in the IAM is the second largest in the EEA, second only to the
          United Kingdom, and that competition to win key supply contracts in France is
          intense, given the value of the market.
(43)      The post-Transaction market share of the merged entity will amount to [20-
          30]% based on value and [20-30]% based on volume, with FDML having a
          market share of [20-30]% share based on value and volume while Tenneco has a
          market share of [0-5]% by value and [0-5]% by volume.
(44)      It appears that the transaction will result in the elimination of one of the smaller
          players (utmost the sixth largest market player). It will not alter materially the
          structure of competition on the market. The Commission considers that post-
          Transaction, a significant number of competitors remain in the market that are
          able to place competitive constraints on the merged entity. These include Delphi
          with [10-20]% market shares, Sidem with [10-20]% market share, ZF Group
          with a market share of [10-20]% and Febi Bilstein with a market share of [5-
          10]%. The remainder of the market is supplied by a number of other smaller
          competitors.24
(45)      On the basis of the above and all available evidence the Commission considers
          that the Transaction does not raise serious doubts as to its compatibility with the
23 Moreover, in accordance with paragraph 19 and 20 of the Guidelines on the assessment of horizontal
   mergers under the Council Regulation on the control of concentrations between undertakings, the HHI
   levels by value are such as to indicate that it is unlikely that competition concerns could arise on this
   market. Post-merger HHI levels are between 1000 and 2000 (by value and by volume) and the delta is
   below 250 by value. Only if the analysis is based on volume instead, the delta is marginally above 250
   with [250-260].
24 Moreover, in accordance with paragraph 19 and 20 of the Guidelines on the assessment of horizontal
   mergers under the Council Regulation on the control of concentrations between undertakings, the HHI
   levels are such as to indicate that it is unlikely that competition concerns could arise on this market.
   Post-merger HHI levels are between 1000 and 2000 and the delta remains below 250, by value as well
   as by volume.
                                                         15
 ---pagebreak---          internal market concerning the manufacturing and supply of ball joints for LVs
         in the IAM in France.
            6.3.2.     Malta
(46)     Given that Malta is the second smallest market in the EEA for the supply of ball
         joints for light vehicles to the IAM, market shares have a tendency to vary
         considerably depending on the outcome of the most recent round of contracting,
         according to the Parties.
(47)     The Parties' combined market shares on the market for the manufacturing and
         supply of ball joints for light vehicles to the IAM in Malta are [20-30]% based
         on value and [20-30]% based on volume, with FDML having a market share of
         [20-30]% by value and by volume, while Tenneco accounts for limited
         increments of [0-5]% by value and [0-5]% by volume.
(48)     It appears that the transaction will result in the elimination of one of the smaller
         market players (utmost the sixth largest player). It will not alter materially the
         structure of competition on the market. The Commission considers that the
         market is characterized by several competitors that will continue to compete
         with the merged entity post-Transaction. In particular the combined entity will
         face strong competition by the ZF Group with a [20-30]% market share. The
         next largest competitors active on this market are Febi Bilstein with a market
         share of [5-10]%, Nipparts with a market share of [5-10]% and OCAP with a
         market share of [5-10]%. The remainder of the market for ball joints for light
         vehicles to IAM customers in Malta is supplied by other market participants.25
(49)     On the basis of the above and all available evidence the Commission considers
         that the Transaction does not raise serious doubts as to its compatibility with the
         internal market with regard to the manufacturing and supply of ball joints for
         LVs in the IAM in Malta.
            6.3.3.     Poland
(50)     On the market for the manufacturing and supply of ball joints for LVs in the
         IAM in Poland, the Parties have a combined market share of [30-40]% by value
         and [30-40]% by volume, with FDML having a market share of [20-30]% by
         value and volume and Tenneco having an only limited market share of [0-5]%
         by value and [0-5]% by volume.
(51)     It appears that the transaction will result in the elimination of one of the smaller
         market players (utmost the sixths largest player). It will not alter materially the
         structure of competition on the market. The Commission considers that the
         market is characterized by several competitors that will continue to compete
         with the merged entity post-Transaction. In particular the combined entity will
         face strong competition by the market leader, also post-merger, the ZF Group
         with a [40-50]% market share. The next largest competitors active on this
25 Moreover, in accordance with paragraph 19 and 20 of the Guidelines on the assessment of horizontal
   mergers under the Council Regulation on the control of concentrations between undertakings, the HHI
   levels are such as to indicate that it is unlikely that competition concerns could arise on this market.
   Post-merger HHI levels are between 1000 and 2000 and the delta remains well below 250 by value as
   well as by volume.
                                                         16
 ---pagebreak---           market are Delphi with a market share of [10-20]%, Meyle with a [5-10]%
          market share and Febi Bilstein with a market share [0-5]%.26
(52)      On the basis of the above and all available evidence the Commission considers
          that the Transaction does not raise serious doubts as to its compatibility with the
          internal market with regard to the manufacturing and supply of ball joints for
          LVs in the IAM in Poland.
     6.4.    Manufacturing and supply of tie rod ends for LVs in the IAM in France,
             Malta and Poland
             6.4.1.    France
(53)      According to the Parties, the French market accounted for more than 14% of the
          total value of tie rod ends for LVs sold in the EEA in 2017 and therefore
          competition to win key supply contracts in France is intense. The Commission
          has no indication that this Transaction would significantly reduce such
          competitive pressure.
(54)      On the market for tie rod ends for LVs in the IAM in France, the Parties have a
          combined market share of [30-40]% by value and [20-30]% by volume, with
          FDML having a market share of [20-30]% by value and volume and Tenneco of
          [5-10]% by value and [5-10]% by volume.
(55)      It appears that the transaction will result in the elimination of one of the smaller
          players (utmost the sixth largest market player). It will not alter materially the
          structure of competition on the market. The Commission considers that the
          market is characterized by several competitors that will continue to compete
          with the merged entity post-merger. The largest of these competitors are Delphi
          with a market share of [10-20]%, Sidem with a market share of [10-20]%, the
          ZF Group with a market share of [5-10]% and Febi Bilstein with a [5-10]%
          market share.
(56)      On the basis of the above and all available evidence the Commission considers
          that the Transaction does not raise serious doubts as to its compatibility with the
          internal market concerning the manufacturing and supply of tie rod ends for LVs
          in the IAM in France.
             6.4.2.    Malta
(57)      The Parties submit that Malta is the second smallest market in the EEA for the
          supply of tie rod ends for light vehicles to the IAM and that market shares have
          a tendency to vary considerably in such small Member States, depending on the
          outcome of the most recent round of contracting.
26 Moreover, in accordance with paragraph 19 and 20 of the Guidelines on the assessment of horizontal
   mergers under the Council Regulation on the control of concentrations between undertakings, the HHI
   levels based on value are such as to indicate that it is unlikely that competition concerns could arise on
   this market. Post-merger HHI levels are above 2000 (with [2000-2500] by value and [2000-2500] by
   volume) and the delta remains below 150 by value. Only if the analysis is based on volume instead, the
   delta is marginally above 150 with [150-160].
                                                          17
 ---pagebreak--- (58)      On the market for the manufacturing and supply of tie rod ends for LVs in the
          IAM in Malta, the Parties have a combined market share of [20-30]% by value
          and [20-30]% by volume, with FDML having a market share of [20-30]% by
          value and volume and Tenneco having a market share of [0-5]% by value and
          [5-10]% by volume.
(59)      It appears that the transaction will result in the elimination of the sixth market
          player (based on value). It will not alter materially the structure of competition
          on the market. The Commission considers that for the manufacturing and supply
          of tie rod ends for LVs in the IAM in Malta, which according to the Parties
          represents just 0.06% of total EEA sales in 2017, the merged entity will face
          significant competition by several competitors post-merger. The largest of these
          competitors are ZF Group with a market share of [20-30]%, Febi Bilstein with
          [5-10]% market share as well as Nipparts and OCAP with [5-10]% market share
          and [5-10]% market share, respectively.27
(60)      On the basis of the above and all available evidence the Commission considers
          that the Transaction does not raise serious doubts as to its compatibility with the
          internal market regarding the manufacturing and supply of tie rod ends for LVs
          in the IAM in Malta.
             6.4.3.    Poland
(61)      On the market for tie rod ends for LVs in the IAM in Poland, the Parties have a
          combined market share of [30-40]% by value and [30-40]% by volume, with
          FDML having a market share of [20-30]% by value and volume and Tenneco
          having a limited market share of [0-5]% by value and [0-5]% by volume.
(62)      It appears that the transaction will result in the elimination of one of the smaller
          market players (utmost the sixth largest market player). It will not alter
          materially the structure of competition on the market. The Commission
          considers that the market is characterized by several competitors that will
          continue to compete with the merged entity post-Transaction. In particular the
          combined entity will face strong competition by the market leader, also post-
          merger, ZF Group with a [30-40]% market share. The next largest competitors
          active on this market are Delphi with a market share of [10-20]%, Febi Bilstein
          with a market share [5-10]% and Meyle with a market share of [5-10]%.28
(63)      On the basis of the above and all available evidence the Commission considers
          that the Transaction does not raise serious doubts as to its compatibility with the
27 Moreover, in accordance with paragraph 19 and 20 of the Guidelines on the assessment of horizontal
   mergers under the Council Regulation on the control of concentrations between undertakings, the HHI
   levels based on value are such as to indicate that it is unlikely that competition concerns could arise on
   this market. Post-merger HHI levels are between 1000 and 2000 (by value and by volume) and the
   delta remains below 250 by value. Only if the analysis is based on volume instead, the delta is [250-
   260].
28 Moreover, in accordance with paragraph 19 and 20 of the Guidelines on the assessment of horizontal
   mergers under the Council Regulation on the control of concentrations between undertakings, the HHI
   levels based on value are such as to indicate that it is unlikely that competition concerns could arise on
   this market. Post-merger HHI levels are just above 2000 (with [2000-2500] by value and [2000-2500]
   by volume) and the delta remains below 150 by value. Only if the analysis is based on volume instead,
   the delta is marginally above 150 with [150-160].
                                                          18
 ---pagebreak---           internal market regarding the manufacturing and supply of tie rod ends for LVs
          in the IAM in Poland.
     6.5.    Manufacturing and supply of axial joints for LVs in the IAM in France
             and Poland
             6.5.1.   France
(64)      According to the Parties, the French market accounts for more than 24% of all
          sales in the EEA by value, and therefore competition to win key supply
          contracts in France is intense. The Commission has no indication that this
          Transaction would significantly reduce such competitive pressure.
(65)      On the market for axial joints for LVs in the IAM in France, the Parties have a
          combined market share of [20-30]% by value and [20-30]% by volume. FDML
          has a market share of [20-30]% by value and volume and Tenneco has a market
          share of [0-5]% by value and [5-10]% by volume.
(66)      It appears that the transaction will result in the elimination of the sixth market
          player (based on value). It will not alter materially the structure of competition
          on the market. The Commission considers that in France, which according to the
          Parties represents about 24% of the value of the EEA market by value, the
          merged entity will face significant competition by several competitors post-
          merger. The largest of these competitors are Delphi with a market share of [10-
          20]%, Sidem with a market share of [10-20]%, the ZF Group with a market
          share of [5-10]% and Febi Bilstein with [5-10]% market share.
(67)      On the basis of the above and all available evidence the Commission considers
          that the Transaction does not raise serious doubts as to its compatibility with the
          internal market regarding the manufacturing and supply of axial joints for LVs
          in the IAM in France.
             6.5.2.   Poland
(68)      On the market for axial joints for LVs in the IAM in Poland, the Parties have a
          combined market share of [30-40]% by value and [30-40]% by volume, with
          FDML having a market share of [20-30]% by value and volume and Tenneco
          having a market share of [0-5]% by value and [0-5]% by volume.
(69)      It appears that the transaction will result in the elimination of the fifth market
          player. It will not alter materially the structure of competition on the market.
          The Commission considers that the market is characterized by several
          competitors that will continue to compete with the merged entity post-
          Transaction. In particular, the combined entity will face strong competition by
          the market leader ZF Group, also post-merger, with a [30-40]% market share.
          The next largest competitors active on this market are Delphi with a market
          share of [10-20]%, Febi Bilstein with a market share [5-10]% and Meyle with a
          [0-5]% market share.
(70)      On the basis of the above and all available evidence the Commission considers
          that the Transaction does not raise serious doubts as to its compatibility with the
          internal market regarding the manufacturing and supply of axial joints for LVs
          in the IAM in Poland.
                                                 19
 ---pagebreak---      6.6.    Manufacturing and supply of complete tie rods for LVs in the IAM in
             France
(71)      According to the Parties, the French market is the second largest market in the
          EEA, second only to the Germany, and therefore competition to win key supply
          contracts in France is intense. The Commission has no indication that this
          Transaction would significantly reduce such competitive pressure.
(72)      On the market for complete tie rods for LVs in the IAM in France, the Parties
          have a combined market share of [20-30]% by value and [20-30]% by volume,
          with FDML having a market share of [20-30]% by value and volume and
          Tenneco having a market share of [5-10]% by value and [5-10]% by volume.
(73)      It appears that the transaction will result in the elimination of the fifth market
          player. It will not alter materially the structure of competition on the market.
          The Commission considers that the merged entity will continue to face
          competitive constraints by several other suppliers on that market. The largest of
          these competitors are Delphi with a [10-20]% market share, Sidem with a [10-
          20]% market share and ZF Group with a [10-20]% market share and Febi
          Bilstein with a [5-10]% market share.
(74)      On the basis of the above and all available evidence the Commission considers
          that the Transaction does not raise serious doubts as to its compatibility with the
          internal market regarding the manufacturing and supply of complete tie rods for
          LVs in the IAM in France.
     6.7.    Manufacturing and supply of stabiliser links for LVs in the IAM in
             France, Malta and Poland
             6.7.1.   France
(75)      According to the Parties, the French market of stabiliser links for LVs in the
          IAM accounted for approximately 11% of the total value of stabiliser links for
          light vehicles sold in the EEA in 2017 and therefore competition to win key
          supply contracts in France is strong. The Commission has no indication that this
          Transaction would significantly reduce such competitive pressure.
(76)      On the market for stabiliser links for LVs in the IAM in France, the Parties have
          a combined market share of [20-30]% by value and [20-30]% by volume, with
          FDML having a market share of [20-30]% by value and volume and Tenneco of
          [5-10]% by value and [0-5]% by volume.
(77)      It appears that the transaction will result in the elimination of one of the smaller
          players (utmost the fifth largest market player). It will not alter materially the
          structure of competition on the market. The Commission considers that the
          merged entity faces significant competition from several competitors that will
          remain on the market post-Transaction and are capable of imposing competitive
          constraints on the Parties, in particular Delphi with a market share of [10-20]%,
          Sidem with a market share of [10-20]% as well as Febi Bilstein and Meyle both
                                                  20
 ---pagebreak---          with [5-10]% market shares. The remainder is supplied by a number of smaller
         competitors.29
(78)     On the basis of the above and all available evidence the Commission considers
         that the Transaction does not raise serious doubts as to its compatibility with the
         internal market with regard to the manufacturing and supply of stabiliser links
         for LVs in the IAM in France.
            6.7.2.     Malta
(79)     The Parties submit that Malta is the third smallest market for the manufacturing
         and supply of stabiliser links for LVs in the IAM in the EEA, accounting for just
         0.08% of total EEA sales in 2017, and that market shares have a tendency to
         vary considerably in such small Member States, depending on the outcome of
         the most recent round of contracting.
(80)     On the market for the manufacturing and supply of stabiliser links for LVs in the
         IAM in Malta, the Parties have a combined market share of [20-30]% by value
         and [20-30]% by volume, with FDML having a market share of [20-30]% by
         value and volume and Tenneco having a market share of [0-5]% by value and
         [0-5]% by volume.
(81)     It appears that the transaction will result in the elimination of one of the smaller
         players (utmost the sixth largest market player). It will not alter materially the
         structure of competition on the market. The Commission considers that in Malta,
         the merged entity will face significant competition by several competitors post-
         merger. The largest of these competitors are ZF Group with a market share of
         [20-30]%, Febi Bilstein with [5-10]% market share, Nipparts with [5-10]%
         market share and OCAP with [5-10]% market share.30
(82)     On the basis of the above and all available evidence the Commission considers
         that the Transaction does not raise serious doubts as to its compatibility with the
         internal market regarding the manufacturing and supply of stabiliser links for
         LVs in the IAM in Malta.
            6.7.3.     Poland
(83)     On the market for stabiliser links for LVs in the IAM in Poland, the Parties have
         a combined market share of [20-30]% by value and [20-30]% by volume, with
         FDML having a market share of [20-30]% by value and volume and Tenneco
         having a market share of [0-5]% by value and [0-5]% by volume.
29 Moreover, in accordance with paragraph 19 and 20 of the Guidelines on the assessment of horizontal
   mergers under the Council Regulation on the control of concentrations between undertakings, the HHI
   levels are such as to indicate that it is unlikely that competition concerns could arise on this market.
   Post-merger HHI levels are between 1000 and 2000 and the delta remains below 250, by value as well
   as by volume.
30 Moreover, in accordance with paragraph 19 and 20 of the Guidelines on the assessment of horizontal
   mergers under the Council Regulation on the control of concentrations between undertakings, the HHI
   levels are such as to indicate that it is unlikely that competition concerns could arise on this market.
   Post-merger HHI levels are between 1000 and 2000 and the delta remains well below 250, by value as
   well as by volume.
                                                         21
 ---pagebreak--- (84)      It appears that the transaction will result in the elimination of one of the smaller
          players (utmost the sixth largest market player). It will not alter materially the
          structure of competition on the market. The Commission considers that the
          market is characterized by several competitors that will continue to compete
          with the merged entity post-Transaction. In particular the combined entity will
          face strong competition by the ZF Group, the market leader also post-merger,
          with a [30-40]% market share. The next largest competitors active on this
          market are Delphi with a market share of [10-20]%, Febi Bilstein with a market
          share [5-10]% and Meyle with a [5-10]% market share.31
(85)      On the basis of the above and all available evidence the Commission considers
          that the Transaction does not raise serious doubts as to its compatibility with the
          internal market regarding the manufacturing and supply of stabiliser links for
          LVs in the IAM in Poland.
     6.8.    Conclusion
(86)      The Transaction does not raise any competition concerns and therefore does not
    raise serious doubts as to its compatibility with the internal market regarding any of
    the 37 affected markets discussed above.
7.      CONCLUSION
(87)      For the above reasons, the European Commission has decided not to oppose the
          notified operation and to declare it compatible with the internal market and with
          the EEA Agreement. This decision is adopted in application of Article 6(1)(b) of
          the Merger Regulation and Article 57 of the EEA Agreement.
                                                               For the Commission
                                                               (Signed)
                                                               Margrethe VESTAGER
                                                               Member of the Commission
31 Moreover, in accordance with paragraph 19 and 20 of the Guidelines on the assessment of horizontal
   mergers under the Council Regulation on the control of concentrations between undertakings, the HHI
   levels are such as to indicate that it is unlikely that competition concerns could arise on this market.
   Post-merger HHI levels are between 1000 and 2000 and the delta remains below 250, by value as well
   as by volume.
                                                         22