CELEX: 31995M0611
Language: en
Date: 1995-07-28 00:00:00
Title: COMMISSION DECISION of 28/07/1995 declaring a concentration to be compatible with the common market (Case No IV/M.611 - Dresdner Bank / Kleinwort Benson) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31995M0611

COMMISSION DECISION of 28/07/1995 declaring a concentration to be compatible with the common market (Case No IV/M.611 - Dresdner Bank / Kleinwort Benson) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 207 , 12/08/1995 P. 0011

  COMMISSION DECISION of 28/07/1995 declaring a concentration  to be compatible with the common market (Case No IV/M.611 -  Dresdner Bank / Kleinwort Benson) 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  Registered with advice of delivery  To the notifying parties  Dear Sirs,  Subject :<ind> Case No IV/M.611  DRESDNER BANK/KLEINWORT  BENSON  <ind> <ind> Notification of 29.06.95 pursuant to Article 4  of Council Regulation No 4064/89  1.<ind> The above mentioned notification concerns the  announced recommended cash offer made by Dresdner Bank AG  (Dresdner) on 26 June 1995 to buy the share capital, issued  and to be issued, of Kleinwort Benson Group plc  (Kleinwort).  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<tab> THE PARTIES  3.<ind> Dresdner is a universal bank with an extensive range  of products and services covering all types of banking  business. Most of Dresdner's turnover is achieved in  Germany. Outside Germany, Dresdner's activities are  concentrated on the investment and commercial banking  sectors. Kleinwort is an investment bank headquartered in  the City of London mainly active in the United Kingdom.  I<tab> THE OPERATION  4.<ind> On 26 June 1995, the Board of Managing Directors of  Dresdner and the Board of Kleinwort announced the terms of a  recommended final cash offer to acquire the whole of the  share capital, issued and to be issued, of Kleinwort. The  directors of Kleinwort have unanimously recommended all  shareholders to accept the offer.   III<tab> CONCENTRATION  5.<ind> After completion of the transaction, Dresdner will  acquire control of Kleinwort. Thus, the operation  constitutes a concentration according to Article 3(1)(b) of  the Merger Regulation.  IV<tab> COMMUNITY DIMENSION  6.<ind> The combined aggregate worldwide turnover of  Dresdner and Kleinwort, calculated in accordance with  Article 5(3)(a) of the Merger Regulation, exceeded 5,000  million ECU in the last financial year (onetenth of total  assets of Dresdner amounts to 20,791 million ECU, and of  Kleinwort amounts to 1,174 million ECU). Both Dresdner and  Kleinwort have communitywide turnover in excess of 250  million ECU but do not achieve more than twothirds of their  aggregate communitywide turnover in one and the same Member  State. The operation therefore has a Community dimension.  V<tab> COMPATIBILITY WITH THE COMMON MARKET  <tab> Relevant product market  7.<ind> Overlap only exists on the following business areas:  investment banking, trading and broking and asset  management.   8.<ind> The investment bank activities may be grouped in  different ways. The exact grouping can be left open since  some of them stand independently and are carried out by  undertakings not receiving the name of investment banks. For  the purpose of analysis of this case investment bank  activities comprise merger and acquisitions and  privatisation advice, handling new issues of company equity  and handling new issues of debt securities. The Commission  has described in Case No IV/M597 Swiss Bank  Corporation/S.G.Warburg all these segments.  9.<ind> Trading and broking activities comprise trading in  equities, bonds, financial instruments/derivatives trading  and foreign exchange and money market. Asset management  involves the marketing of unit trust and provision of  portfolio management services.  10.<ind> For the purpose of the present case it is not  necessary to provide a definitive delimitation 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> Relevant geographic market  11.<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.  12.<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." [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.  <tab> Assessment  13.<ind> There is little product overlap between Dresdner  and Kleinwort and their activities are geographically  complementary. The new entity will rank No 15 and No 9 on  the list of the top European banks classified by Tier 1  Capital and total assets respectively.   14.<ind> Market shares in the relevant economic sector are  difficult to assess. As an alternative, participants in the  investment banking and other financial services tend in some  areas to rely on "league tables" designed to give an  indication of relative market position and performance in  what is a fragmented and volatile business sector. Given  special circumstances of the case the Commission considers  that "league tables" adequately reflect the market power of  the parties.  <tab> Investment banking activities   15.<ind> In the past three years, Kleinwort's average share  on M&A advice to crossborder and domestic deals in which the  target was UK based was 8.6%. Kleinwort's activities in  Germany were very limited. Dresdner is a marginal player on  the provision of M&A advice services. Kleinwort ranks 13 in  the list of European privatisation assignments undertaken in  1994. Dresdner does not feature on this table.  16.<ind> The new entity will rank No 9 in European equity  group manager league table to December 31, 1994. Kleinwort  has not been involved at the lead manager level in the issue  of German equity securities on that year. On the handling of  new issues of debt securities, Dresdner is involved  primarily in the issue of DM denominated debt securities  whereas Kleinwort is involved in the issue of Sterling  denominated debt securities. In the global Eurobond issues  of any currency the position of the new entity significantly  changes from year to year but, in any case, is not among the  15 biggest European players.  <tab> Trading and broking and asset management activities.  17.<ind> Trading activities of Dresdner on the German stock  exchange amounted to 10.2% of the volume in 1994. Kleinwort  estimates its share of agency dealing on equity securities  on the London Stock Exchange to be 6.5% in the same year. On  financial instruments/ derivatives trading the new entity  will be one among many other players in a highly fragmented  market. On foreign Exchange and money market, added market  shares on a global basis are lower than 2.5%. An indication  of the position of the new entity in the segment of asset  management activities is given by the international league  table of the top institutional investors outside United  States, it will rank No 18 in the above mentioned table.  18.<ind> In view of this, the operation does not raise  serious doubts about its compatibility with the common  market.  VI<tab> CONCLUSION  19.<ind> It follows from the above that the proposed  concentration would not create or strengthen a dominant  position as a result of which competition would be  significantly impeded in the common market or in a  substantial part of it.  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.  For the Commission,