CELEX: 31992M0249
Language: en
Date: 1990-12-20 00:00:00
Title: COMMISSION DECISION of 10.08.1992 declaring a concentration to be compatible with the common market (Case No IV/M.249 - NORTHERN TELECOM / MATRA TELECOMMUNICATION) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31992M0249

COMMISSION DECISION of 10.08.1992 declaring a concentration to be compatible with the common market (Case No IV/M.249 - NORTHERN TELECOM / MATRA TELECOMMUNICATION) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 240 , 19/09/1992 P. 0000

 COMMISSION DECISION of 10.08.1992 declaring a concentration to  be compatible with the common market (Case No IV/M.249 -  NORTHERN TELECOM / MATRA TELECOMMUNICATION) 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/M249 - Northern Telecom/Matra  Telecommunication <ind> <ind> Notification of 9.7.1992 pursuant to Article 4 of   Council Regulation No. 4064/89  1.<ind> The notification concerns principally the proposed  acquisition by Northern Telecom Limited (NT) of joint control  of Matra Communication S.A. (MC), which is currently under the  sole control of Matra S.A. (Matra).  2.<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 raise  serious doubts as to its compatibility with the common market.  I.<ind> THE TRANSACTION AND THE PARTIES  3.<ind> NT and Matra intend to establish a long-term  partnership in the field of telecommunications equipment. To  that effect NT will acquire joint control of MC, which conducts  Matra's telecommunication activities. In addition, NT will set  up with MC two joint ventures with regard to mobile telephony  worldwide and public networks in France. Furthermore, NT  intends to acquire a minority interest in the parent company of  Matra, MMB S.A. The proposed transaction will provide NT with  the opportunity to enter new geographical markets in the  Community, while MC will obtain access to the resources of a  global telecommunications equipment supplier.   4.<ind> NT is a Canadian manufacturer of telecommunications  equipment which ranks amongst the top ten telecommunications  suppliers worldwide. The Canadian BCE Inc. holds a majority  interest in NT and in the Canadian telecommunications operator  Bell Canada.  5.<ind> Matra is a diversified French holding company with  activities including defence, transport systems, aerospace and,  through MC, telecommunications. Matra is ultimately controlled  by the Lagardère family.  II.<ind> CONCENTRATION  6.<ind> NT will acquire a multitude of corporate and financial  links with the Matra group. Most significant are equity  participations in MC and the two joint ventures to be set up  with MC. The equity participation in MC will be 20% initially.  This will be increased by another 20% approximately at the  latest by 1997 through shares exchanged in return for a loan  given by NT. NT may even further increase its stake in MC  bringing its participation to [deleted - business secret.] if  it wishes to do so. The equity participation in the two joint  ventures will be 50%. All three companies will be governed  mainly through two limited partnerships, the principal partners  of which are NT and Matra.  <ind> Joint control  7.<ind> NT and Matra will control MC and the newly created  companies jointly, since both, NT and Matra, will have to  approve unanimously fundamental business decisions of all three  as well as their business plans and budgets. In addition, NT  and MC have to agree on the chairmen of the two joint ventures,  which NT has the right to designate.  <ind> Full-function joint venture  8.<ind> MC is engaged in the manufacture and supply of  telecommunications equipment, including public and private  switching systems, telephone sets, mobile telephony and  cellular telephones. The company will continue its activities  as a full-function entity as before. In addition, it will take  over NT's French private switching business (BCS business),  which will be transferred to MC.   <ind> The parties intend to allocate special responsibilities  to MC and the two separate legal entities to be set up. MC will  be attributed global responsibility for product line planning  and R&D for terminals. One of the proposed joint ventures (The  GSM Company) will become responsible for the development and  supply of mobile telephony worldwide for both, NT and MC. The  other joint venture (The Networks Company) will become  responsible for the marketing, sales and customer service of  packet switching, transmission and public switching products in  France.   <ind> It can be left open whether these two proposed joint  ventures will become full-function entities. Their creation is  part of the acquisition of joint-control by NT of Matra's  telecommunication business, MC, which is a full-function  entity. It should not make  any difference whether the  activities taken over by these joint ventures are carried out  within special divisions of MC itself, or are carried out  through separate legal entities.  <ind> Absence of coordination of competitive behaviour  9.<ind> The parties' intention is that in the long run MC will  be integrated into NT's European and in some respects worldwide  business. Thus, MC will become the group's "center of  excellence" in the field of telecomunications terminals and  will have global responsibility for product line planning and  R&D. They also intend to converge product lines in private  switching, to consolidate their sales, marketing and service  organisations in France and to study the potential for  consolidation in Belgium, Germany and Spain and eventually in  all Member States. The GSM Company will be responsible for both  parties' mobile telephony business worldwide, combining MC's  cellular telephones and radio base stations with NT's switching  equipment.  10.<ind> In principle Matra (and in fact the Lagardère group)  will no longer be involved in the telecommunications business  as an independent player. The only exception to this is a joint  venture between Matra and Ericsson, namely, MET, which operates  in the field of public digital switching in France, with a  turnover of around [deleted - business secret.] (that is  [deleted - business secret - read "a small proportion.] of MC's  total turnover). MET is France Telecom's second supplier of  public digital switching equipment, with a limited share of the  market compared to the major supplier Alcatel. Since it began  operations in 1986 MET's activities have been confined  essentially to France and to certain public switching products,  produced under licence from Ericsson. There is no scope for  coordination of competitive behaviour between Matra/MET and the  Networks Company (of MC and NT) because the Networks Company  realistically can only seek to enter the French market through  product lines other than those currently produced by Matra/MET,  [deleted - business secret.]. France Telecom's demand for  public digital switching products will have been almost  entirely realised through the operation of the current supply  agreement. Under these circumstances coordination of  competitive behaviour is unlikely to occur.  <ind> For the same reasons no coordination of competitive  behaviour is likely between Matra/MET and the GSM Company (NT  and MC) with regard to digital equipment for digital cellular  radio systems. As in the case of public switching MET is a  supplier to France Telecom under a contract which will expire  in 1995.  11.<ind> Matra owns a US manufacturer of private switching  systems, Intecom, which is mainly active in the North American  market where structures of competition are different from  Community markets. Its annual European sales of around 4  million ECU can be regarded as insignificant in competition  terms.  12.<ind> In conclusion the proposed acquisition of joint  control by NT in MC can be considered as a concentrative joint  venture within the meaning of Article 3 of the Merger  Regulation.   III.<ind> COMMUNITY DIMENSION  13.<ind> The aggregate worldwide turnover of the BCE group and  the Lagardere family group of companies exceeded 5 billion ECU  in 1991 (BCE 16,048 M ECU, Lagardere 7,703 M ECU). Both have a  Community-wide turnover of more than 250 million ECU (BCE  around 900 M ECU, Lagardere 2,587 M ECU), and they did not  achieve more than two-thirds of their Community-wide turnover  in one and the same Member State. Thus the proposed operation  meets the thresholds of Article 1(2) of the Regulation.  IV.<ind> COMPATIBILITY WITH THE COMMON MARKET  14.<ind> NT and MC are both manufacturers of telecommunications  equipment. There are significant overlaps between their  activities in four areas, namely, public switching, private  switching, telephone sets and mobile telephony.  <ind> Geographic Reference Market  15.<ind> It is not necessary to decide in the present case  whether the geographic reference market is national or  Community-wide since even on the narrower market definition no  dominant position is created or reinforced.  <ind> Assessment  16.<ind> The principal activities of NT and MC are carried out  in different geographic areas - more than 70% of NT's EC  turnover is generated in the UK (through STC) while almost 90%  of MC's operations are confined to France with virtually all  the rest in Germany (through AEG's former telecommunications  subsidiaries). As a result of the minimal overlap between the  parties, the proposed operation will not lead to the creation  or reinforcement of a dominant position in the four identified  affected markets in the Community or within a substantial part  of it.  <ind> Public switching  17.<ind> Matra/MET is only active in France where it holds a  market share of less than 25% [deleted - business secret.]. NT  has a market share of less than 10% [deleted - business  secret.] in the UK, the only EEC country where it is currently  supplies public switching systems. The combined market share of  both parties on a Community-wide basis is significantly less  than 10% (actually 2%).  <ind> Private switching  18.<ind> In the private switching systems business both parties  are in principle active in most or all of the Community but  their combined market share does not exceed 25% in any Member  State, with the exception of Ireland, where MC is not active  and thus there is no overlap. On a Community level their  combined market share is also below 25% [deleted - business  secret.].   <ind> Telephone sets  19.<ind> An overlap between the parties' activities exists only  in Belgium and Portugal, where their combined market shares  will remain significantly below 10%. There is no overlap in the  UK, NT's most important market in the EEC, or in France and  Germany, MC's most important EEC markets.  20.<ind> At the Community level the parties' combined market  share remains below 25% [deleted - business secret.].  <ind> Mobile Telephony  21.<ind> MC produces the full range of mobile telephone  equipment, with switching produced through MET, whereas NT only  recently introduced switching equipment into the EEC, in the  UK. NT's market position in the EEC is therefore currently  insignificant while MC has a stronger position in France  [deleted - business secret.] where it is France Telecom's  second supplier for this equipment. The parties' combined EEC  market share is well below 10%.  22.<ind> On the basis of the above, it can be concluded that  the proposed acquisition will not lead to the creation or  reinforcement of a dominant position in the common market or a  substantial part thereof.  V.<ind> ANCILLARY RESTRAINTS  23.<ind> The non-competition obligations and the cross- licensing agreement entered into between the parties can be  regarded as directly related to and necessary to the  implementation of the concentration and are therefore ancillary  within the meaning of the Regulation.  v.<ind> FINAL ASSESSMENT  24.<ind> Based on the above findings, the Commission has come  to the conclusion that the proposed concentration does not  raise serious doubts as to its compatibility with the common  market.  For the above reasons, the Commission has decided not to oppose  the notified concentration and to declare it compatible with  the common market. This decision is adopted in application of  Article 6(1)b of the Council Regulation No. 4064/89.  For the Commission,