CELEX: 31995M0575
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.575 - Volvo / VME) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31995M0575

COMMISSION DECISION of 11/04/1995 declaring a concentration to be compatible with the common market (Case No IV/M.575 - Volvo / VME) 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 11/04/1995 declaring a concentration to be compatible with the common market (Case No IV/M.575  - Volvo  /  VME)  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.575  VOLVO/VME <ind>  <ind>  Notification of 17th March  1995  pursuant  to Article 4 of Council Regulation No 4064/89. 1.<ind>  On  17th March 1995 VOLVO AB ("Volvo") notified  an agreement  for  the  acquisition of the whole  of  VME  N.V. ("VME"). 2.<ind>   After   examination  of  the   notification,   the Commission  has concluded that the notified operation  falls within the scope of Council Regulation No. 4064/89 and  does not  raise serious doubts as to its compatibility  with  the common market. I.<ind> THE PARTIES  3.<ind> Volvo AB is a Swedish company mainly active  in  the car,  bus and truck industry, and furthermore has operations in   the   marine  and  industrial  engines  and   aerospace businesses.   Volvo  is also active in the  food,  beverage, tobacco,   matches  and  lighter  industries   through   its subsidiaries. 4.<ind> VME is a Dutch company active in the manufacture and distribution of earthmoving and construction equipment.   It has a number of subsidiaries active in the same industry. II.<ind> THE OPERATION 5.<ind>  The  proposed operation consists in the acquisition by  Volvo of the whole of VME, by way of purchase of shares. Hitherto VME has been jointly controlled by Volvo and  Clark Equipment  Company, an American corporation  active  in  the construction equipment business. 6.<ind>   Under  the  proposed  operation  VME   becomes   a whollyowned subsidiary of Volvo, consequently the  operation results  in  a  change from joint control to  sole  control. [Deleted business secret.]. III.<ind> CONCENTRATION 7.<ind> The operation constitutes a concentration within the meaning  of  article 3(1) (b) of the merger regulation.   It consists  in the passage from joint control to sole  control over VME, which subsequently ceases to be a joint venture. IV. COMMUNITY DIMENSION 8.<ind>  The  combined  worldwide turnover  of  the  parties exceeds  5.000  million  ECU. The aggregate  Community  wide turnover of each party exceeds 250 million ECU.  They do not achieve  more than two-thirds of their turnover in  one  and the  same  Member  State.  The  operation  has  therefore  a Community dimension. V.<ind> THE RELEVANT MARKETS A.<ind> Relevant Product Market 9.<ind>  There are no product markets where both parties  to the    concentration    are    active    (i.e.    horizontal relationships), although there are two areas  in  which  the parties have a vertical relationship. <tab> <ind> The earthmoving equipment sector, which includes a  number  of products that have complementary functions  in earthmoving operations, namely excavators, loaders, haulers, dozers, scrapers and graders.  <tab>  <ind>  The  sector of industrial diesel  engines  for offhighway  mobile applications.  Earthmoving  equipment  is generally  powered by medium power diesel engines.   Certain manufacturers  of  earthmoving equipment produce  their  own engines  while others purchase such engines from independent manufacturers. 10.<ind> In view of the nature of the proposed operation, it is  not necessary to define these markets exactly (see below under "Assessment"). B.<ind> Geographical Reference Market 11.<ind>  International firms may buy earthmoving  equipment anywhere  in  the  world  for use  anywhere  in  the  world. However,   there   are  certain  price  and   market   share differences  which could indicate the existence of  narrower markets. 12.<ind>  Customers  are  able to buy  diesel  engines  from outside their country and there are no barriers to entry nor substantial  price differences for similar products  between neighbouring  areas.   Nevertheless, to  some  extent  there appear  to be price variations and differences in producers' market  shares  between different Member States  that  could suggest a narrower market definition.    13.<ind> In any event, in view of the nature of the proposed operation, the precise market definition can  be  left  open (see below under "Assessment"). VI<ind> ASSESSMENT 14.<ind>  As  mentioned above, there are no product  markets where   both   parties  to  the  concentration  are   active (horizontal    relationships).     There    are     vertical relationships since Volvo is engaged in a business  activity (production  of diesel engines) which is upstream  of  VME's activities  (manufacturing and distribution  of  earthmoving equipment).  15.<ind> VME buys engines for its earthmoving equipment from a  number  of suppliers [Deleted business secret.].  On  the other hand, Volvo supplies such engines to a large number of customers other than VME. 16.<ind>  For  earthmoving equipment, VME's position  at  EU level is relatively small, with shares estimated about [Less than  15%.] or below  in the last three years.   At national level  it  exceeds [More than 20%.] only in three countries: Ireland  ([More  than  20%.],Sweden ([More  than  20%.]  and Norway ([More than 20%.].  17.<ind>  The  main  competitors  in  this  area  are  large companies, some of whom (Caterpillar, JCB) are leading firms in  every Member State, and several other smaller ones  some of which are specific to a particular Member State.   18.<ind> For industrial diesel engines, Volvo's position  at EU  level  is very small, with about [Less than 5%.]  market share.   At national level it is under [Less than  30%.]  in every case except in Finland and The Netherlands, with [Less than  30%.]  in  both.    The  main  competitors  are  large companies such as Cummins Engines, Perkins Engines, Mercedes Benz,  KH Deutz or Iveco, with estimated market shares which range  from  [Deleted business secret.]  at  national  level [These  figures refer to the "free market",  that  is,  they exclude  the "inhouse" production of diesel engines by  some companes  for  use  in  their own  earthmoving  equipment.]. Taking  into  account this market structure, no  appreciable foreclosure effect can be expected. VII<ind> CONCLUSION 19.<ind> In view of the absence of horizontal relationships, of  the relatively modest market shares of Volvo and VME, of the   existence  of  strong  competitors,  of  the  unlikely creation  of  significant conglomerate effects by  a  change from  joint to sole control, and the lack of exclusivity  in the   supply  relationship  between  Volvo  and   VME,   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,