CELEX: 32013M6844
Language: en
Date: 2013-07-01 00:00:00
Title: Commission Decision of 01/07/2013 declaring a concentration to be compatible with the common market (Case No COMP/M.6844 - GE / AVIO) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |
|                                  |                                                                                                         |
|                                  |                                                                                                         |
|                                  |                                                                                                         |
|                                  |                                                                                                         |

Brussels, 1.7.2013
C(2013) 4253 final

|To the Notifying Party:                                            |                                                                   |
|                                                                   |                                                                   |
|                                                                   |                                                                   |
|                                                                   |                                                                   |

Dear Sir/Madam,

Subject:    Case No COMP/M.6844 – GE/ Avio
Commission decision pursuant to Article 6(1)(b) in conjunction with Article 6(2) of Council Regulation No 139/2004

1. On 13 May 2013, the European Commission received a notification of a proposed concentration pursuant to Article 4 of Council  Regulation  (EC)
   No 139/2004[1] by which the undertaking General Electric Company ("GE", United States) acquires within the meaning of  Article  3(1)b  of  the
   Merger Regulation sole control of the Aviation Business of Avio S.p.a ("Avio", Italy) by way of  purchase  of  shares.[2]  GE  is  hereinafter
   referred to as "the Notifying Party", whereas GE and Avio are collectively referred to as "the Parties".

 2. After having been informed at the appropriate stage of the procedure that it  could  not  be  excluded  that  the  proposed  transaction,  as
    originally notified, might raise serious doubts as to its compatibility with the internal market, the Notifying Party  submitted  commitments
    on 11 June 2013 designed to eliminate the serious doubts identified by the Commission, in  accordance  with  Article  6  (2)  of  the  Merger
    Regulation. Specifically, the Notifying Party committed to a number of obligations to provide additional protections towards Pratt &  Whitney
    and Rolls-Royce against disruptions of supply and to eliminate any potential conflicts of interest between GE  and  the  EUROJET  Turbo  GmbH
    (Eurojet). In light of the agreements subsequently concluded between the Parties and Pratt & Whitney, on the one hand, and  the  Parties  and
    Rolls-Royce, on the other hand, the Commission considers that no serious doubts arise from a possible input  foreclosure  of  components  for
    Pratt & Whitney and Rolls-Royce engines (see below), so that the relevant part of the commitments submitted by the  Notifying  Party  are  no
    longer necessary. As explained in section VI below, only the commitments regarding Eurojet, a final version of which  was  submitted  by  the
    Notifying Party on 26 June 2013, are still deemed necessary to declare the proposed transaction compatible with the internal market.

    THE PARTIES

3. GE is a global, diversified manufacturing, technology and services company. GE is made up of eight business units. GE Aviation,  the  business
   unit involved in the proposed concentration, manufactures commercial and military jet engines  and  components,  turbo  propellers  and  turbo
   shafts, as well as avionics and mechanical systems for aircraft.

4. Avio is a global aerospace manufacturer and service provider active in the following business areas: jet engine  modules,  maintenance  repair
   and overhaul, control and automation systems, and electrical systems. Avio's assets and operations relating to its space business are not part
   of the proposed transaction.

    THE OPERATION

5. On 21 December 2012, GE and Avio signed a Sale and Purchase Agreement ("SPA") according to which GE intends to acquire 100% of the  shares  in
   a company owning Avio's Aviation Business for EUR 3.3 billion.

 6. Pursuant to the SPA, Avio will incorporate a wholly-owned limited liability company ("AeroCo") to which it  will  transfer  all  the  assets,
    contracts and liabilities of Avio used exclusively or predominantly for the conduct of its Aviation Business. GE will purchase  100%  of  the
    ownership interest of AeroCo, while Avio will retain all assets and liabilities related to its Space Business.

    CONCENTRATION

7. As a result of the proposed transaction, GE will acquire sole control of the whole of  Avio's  Aviation  Business.  The  proposed  transaction
   therefore constitutes a concentration within the meaning of Article 3(1)(b) of the Merger Regulation.

    EU DIMENSION

8. The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 000 million (GE: EUR 114 694 million, Avio:  […]).
   Each of them has an EU-wide turnover in excess of EUR 250 million (GE: […], Avio: […]), but they do not achieve more than two-thirds of  their
   aggregate EU-wide turnover within one and the same Member State.

9. The proposed transaction has therefore an EU dimension under Article 1(2) of the Merger Regulation.

    RELEVANT MARKETS

1 Industry overview

10. In the aircraft engine industry, original equipment manufacturers ("OEMs") design and manufacture the engines. The engines  are  specifically
   designed and tailored for a specific airframe or platform. The primary engine OEMs are GE, Pratt & Whitney  ("P&W"),  Rolls-Royce  ("RR")  and
   Snecma, which, in addition to manufacturing engines on their own, are also part of joint ventures or consortia such  as  CFM  International[3]
   ("CFMI"), Engine Alliance,[4] EuroProp International,[5] Eurojet,[6] International Aero Engines AG[7] ("IAE") and Turbo Union.[8]

11. P&W is a US-based aircraft engine manufacturer which is a subsidiary of United Technologies Corporation ("UTC"). Other  members  of  the  UTC
   Group include, inter alia: Pratt & Whitney Canada ("PWC"); Sikorsky, a helicopter airframer; and UTC Aerospace Systems  which  was  formed  in
   2012 through the combination of Hamilton Sundstrand and the recently acquired Goodrich Corporation.

12. RR is a UK-based aircraft engine manufacturer which makes gas  turbine  engines  for  military,  civil,  and  corporate  aircraft  customers,
   powering inter alia large commercial aircraft, regional jets, business jets, military fighters, military transports and helicopters.

13. Snecma is a French aircraft and rocket engine manufacturer which is a subsidiary of the SAFRAN Group. The SAFRAN Group also includes Hispano-
   Suiza and Techspace Aero.

14. Due to the significant investment required to design and produce a new engine, sometimes one or more OEMs may come together with  or  without
   additional partners to share the risk and reward of a particular engine programme. Supply agreements between OEMs and third parties  (that  is
   to say suppliers) are often in the form of Risk and Revenue Sharing Participation ("RRSP")  agreements,  implying  that  the  partner  pays  a
   participation fee to share the programme risks and revenues for the life of the programme. In particular, the partner typically shares in  the
   development programme expenses, aircraft certification costs and sales concessions. In return it receives a fixed share of  engine  and  spare
   parts revenues pre-negotiated with the engine OEM. Because the revenue share is pre-fixed, there is no  scope  for  the  partner  to  increase
   prices during the course of the engine programme.

15. Airbus SAS ("Airbus", France) and the Boeing Company ("Boeing", US) are the two largest airframe manufacturers of large  commercial  aircraft
    ("LCA"), including narrow-body and wide-body commercial aircraft. Bombardier and  Embraer  S.A.  ("Embraer",  Brazil)  are  the  two  largest
    manufacturers of regional aircraft, whereas for business jets, Bombardier, Embraer, Cessna, Dassault and Gulfstream Aerospace Corporation are
    the main players. With regard to military aircraft, fighter jet airframers include Boeing, Dassault, Sukhoi,  Eurofighter,  Lockheed  Martin,
    SAAB and Russian Aircraft Corporation MiG (Russia), while important military transport  airframers  include  Lockheed,  Airbus,  Boeing,  and
    Kawasaki Heavy Industries ("KHI").

2 Vertical relationship between the Parties

16. As Avio is a supplier of engine components and  GE  is  an  engine  manufacturer,  the  principal  relationships  involved  in  the  proposed
   transaction are mainly of a vertical nature.[9] OEMs (such as GE and its competitors P&W and RR) are Avio's customers.

3 Product market definition – upstream markets

1 Low Pressure Turbines ("LPTs")

17. The Commission has analysed in the past a number of aerospace component markets and has generally concluded that each aerospace component  is
   a market in itself essentially on the basis that each component performs a distinct and vital function in the operation of the  aircraft  type
   it is used for, and is airframe specific (that is to say, customer engineered).[10]

18. The low pressure turbine ("LPT") is a component of aircraft turbofan, turboprop and turboshaft engines which converts the gases  exiting  the
   combustion chamber into mechanical energy. This energy is used to drive the fan or propeller and the low pressure compressor  by  means  of  a
   long shaft running through the engine centreline. The LPT must be capable of withstanding high stresses due to the high gas  temperatures  and
   extreme centrifugal forces of several tons acting on the disk rims.

19. According to the Notifying Party, there are no previous Commission decisions concerning LPTs. The Notifying Party submits that  the  relevant
   product market for LPTs is the manufacture of LPT components for all commercial aircraft engines, irrespective of any differences depending on
   the size and mission profile of the airframe. The Notifying Party submits that the major LPT suppliers are present across all sizes  of  civil
   aircraft.

20. The market investigation has confirmed that LPTs are part of a product market in their own right in that they cannot be substituted from  the
   demand side by any other type of component. However, the market investigation was not conclusive regarding the question whether the market for
   the supply of LPTs should be further segmented according to aircraft size or purpose.

21. With respect to a potential segmentation according to the aircraft size (that is to  say  wide-body  LCA,  narrow-body  LCA,  large  regional
   aircraft, small regional aircraft, corporate aircraft and helicopters), customers  generally  agreed  that  the  competitive  conditions  (for
   example the number and identity of suppliers, manufacturing techniques/machines, know-how, required investment, marketing and technology)  are
   similar across the various aircraft sizes.[11] One customer also stated that "the fundamental design principles for LPTs do not  vary  greatly
   across the list of applications […] design, development and manufacturing capability can largely be read  across."[12]  However,  the  replies
   from competitors were mixed as half of the respondents believe that competitive conditions in each segment are different, pointing for example
   to differences in size, materials, process requirements and supplier capability and past experience in the various segments.[13]

22. In any event, the Commission considers that the precise product market definition for the supply of LPTs can be left  open  as  the  proposed
   transaction does not raise serious doubts under any possible approach.

2 Combustion Chambers ("CCs")

23. In an aircraft engine, the combustion chamber ("CC", also known as the  combustor)  sits  between  the  compressors  and  the  turbines.  The
   compressors draw in and compress large volumes of air, which are mixed with fuel and burned within the CC, generating very high temperatures.

                                                           Figure 1: Combustion chamber

                                                                      [pic]

                                                             Source: Notifying Party

24. The Notifying Party submits that the relevant product market for CCs is the market for aerospace fabrications, that is to  say  a  family  of
    constructed static components for aircraft engines that are typically assemblies made up of machined parts, formed sheet metal,  and  complex
    castings.[14] According to the Notifying Party, this market would include CCs for all commercial engines, regardless of their type  (annular,
    [15] can-type[16] or can-annular type CCs[17]), given that all fabrications suppliers manufacture a very wide range of these  products  using
    identical manufacturing processes.

25. According to the responses to the Commission's requests for information, CCs can  be  produced  alongside  fabrications  but  it  is  unclear
    whether there is enough supply-side substitutability to consider CCs as being part of a broader market for fabrications.[18] Similarly, it is
    unclear whether the market for CCs should be further segmented depending on the type of aircraft.[19]

26. As regards the different types of CCs, the market investigation suggests that they can in principle be used for the same  engines  but  that,
    once the engine has been designed for a specific CC, it is not easy to switch between models. Modern engines  would  use  annular  CCs  given
    their benefits in terms of weight, volume and engine operability.[20] The market investigation also suggests that the different types of  CCs
    can be produced by the same manufacturers.[21]

27. In any event, the Commission considers that the precise product market definition for the supply of CCs can be  left  open  as  the  proposed
    transaction does not raise serious doubts under any possible approach.

3 Turbine Exhaust Cases ("TECs")

28. Turbine exhaust cases (or "TECs") are the rear structure of a jet engine. The TEC serves three primary functions in the engine system.  First
   it provides the main structural mount for the rear of the engine. Second, it directs the hot gases that exhaust from the rear turbine  through
   the vanes to optimize the exit flow in such a way as to optimise the engine's efficiency. Third, it provides the structural  support  for  the
   rear bearing and the necessary plumbing to provide the bearing section with lubricating oil and cooling air if so designed.[22]

29. From a demand-side perspective, TECs cannot be substituted by any other engine component. However, as for CCs, the Notifying Party  considers
   that TECs belong to the wider segment of "fabrications". According to the Notifying Party, fabrications are not technological  differentiators
   between aircraft engines and are also not the object of significant technological progress. The Notifying Party submits that if from a demand-
   side perspective an array of different fabrications may on an individual basis be unique in design or function, from a supply-side perspective
   all fabrications suppliers manufacture a very wide range of these products and therefore all fabrications are part of a larger product market.

30. Even if a distinct market for TECs were considered, the Notifying Party considers that, for supply-side substitutability  reasons,  isolating
   a specific market for TECs for a specific type of aircraft (for example TECs for business jets or  LCAs)  does  not  reflect  the  competitive
   realities of the market.

31. Respondents to the Commission's requests for information confirmed that TECs are not substitutable with other aircraft engine components  and
   should be considered as distinct products from other aircraft components. As regards a further segmentation  within  TECs  regarding  aircraft
   size or purpose, competitors and customers generally agreed that TECs are specifically designed for an engine  configuration  or  application.
   When the engine configuration is not similar (for example the geared turbofan solution adopted in a narrow-body aircraft), TECs  also  exhibit
   significant differences in manufacturing techniques and technologies. Regarding aircraft with comparable architecture but different sizes,  as
   larger engines are more complex systems, manufacturing techniques and know-how for TECs for these large engines  are  more  specific  and  the
   array of potential suppliers is narrower.[23]

32. In any event, the Commission considers that the precise product market definition for the supply of TECs can be left  open  as  the  proposed
   transaction does not raise serious doubts under any possible approach.

4 Oil Pumps and Oil Tanks

33. Oil pumps and oil tanks are used in the lubrication and cooling of engine bearings and can either stand alone in an engine  or  else  can  be
   integrated[24] into the accessory gearbox ("AGB", see section V.3.7 below). The pressure from the oil is also used  as  a  form  of  hydraulic
   power for some auxiliary systems, and to wash away particulates and contaminates. The design and manufacture of oil pumps and tanks  is  often
   tendered as part of the AGB, but these parts are less technically complex than the design and manufacture of gearboxes, and can be  outsourced
   to a subcontractor.

                                                         Figure 2: Oil pump and oil tank

                                                                      [pic]

                                                             Source: Notifying Party

34. There are two types of oil system: the wet sump and the dry sump. Oil tanks are used for dry sumps, while wet sumps  rely  on  oil  contained
   within an engine in a pool (the sump) to supply lubrication. Dry sumps are more complex than wet sumps, and are used for larger  engines  (and
   thus on larger aircraft). According to the Notifying Party, almost all turbofan, turboprop and turboshaft engines use dry  sumps  rather  than
   wet sumps as lubrication systems. The Notifying Party submits that all aviation dry sump suppliers also have  the  capability  to  design  and
   manufacture wet sump oil pumps.

35. Oil pumps can also be designed either with a vane or a gerotor type pump. Vane and  gerotor  pumps  are  both  rotary  positive  displacement
   pumps, which means that they use a rotating mechanism to create a vacuum to draw in and trap fluid, which is  then  forced  into  a  discharge
   pipe. According to the Notifying Party, the primary difference between the two is how they generate the vacuum. Both types can be used for the
   pumping of oil in an aircraft engine although gerotors are sometimes preferred since they are considered to  be  more  robust.  The  Notifying
   Party submits that all oil pump suppliers are capable of providing either gerotor or vane pumps.

36. The Commission has not considered oil pumps and oil tanks in previous decisions. In the Notifying Party's view the relevant  product  markets
   are the manufacture of (i) oil pumps for all commercial and military aircraft engines and (ii) aerospace fabrications, which include oil tanks
   (including oil tanks for all commercial and military aircraft engines).

37. With regard to oil pumps, the market investigation confirmed that there are technical differences between dry sumps and wet  sumps  and  that
   indeed almost all turbofan, turboprop and turboshaft engines use dry sumps rather than wet sumps.[25]  In  line  with  the  Notifying  Party's
   claim, the market investigation also indicated that wet sumps are mostly used with reciprocating engines and so  are  usually  only  found  on
   smaller aircraft.[26]

38. It was also confirmed that […] oil pumps can be designed either with a vane or a gerotor  pump[27]  and  that  customers  purchase  both.[28]
   Manufacturers, however, are sometimes specialised in either gerotor or vane pumps.[29]

39. As regards supply-side substitutability, it has also been pointed out that there "are many configurations of lubrication systems,  and  these
   are predicated on each customer's approach to system design."[30] There are several competitors in lubrication systems which can  produce  all
   types.[31] Finally, the large majority of competitors confirmed that the components they produce for lubrication systems can be  used  in  all
   applications, (that is to say small and large engines, military or civil aircraft, etc).[32]

40. For the purposes of the present decision, however, the Commission considers that the precise product market definition for the supply of  oil
   pumps and oil tanks can be left open as the proposed transaction does not raise serious doubts under any possible approach.

5 Maintenance, Repair and Overhaul ("MRO")

41. Maintenance, Repair and Overhaul ("MRO") refers to the servicing of aircraft, engines and their respective components.

42. The Commission has previously divided MRO services for commercial aircraft into four separate segments:  (i)  line  maintenance;  (ii)  heavy
   maintenance; (iii) engine maintenance; and (iv) component maintenance.[33] Furthermore, the Commission has previously considered a further sub-
   division of line and heavy maintenance into so-called A, B, C and D-checks.[34] The Commission has also considered subdivisions on  the  basis
   of aircraft and engine type. In the case of components maintenance, the Commission has found it appropriate to  distinguish  between  MRO  for
   commercial aviation and MRO for business aviation.[35] The market investigation in the present case has confirmed this distinction.[36]

43. The Notifying Party submits that a separate market for the provision of MRO for military aircraft exists.  From  a  demand-side  perspective,
   the majority of respondents to the Commission's requests for information indicated that MRO for civil aircraft and MRO for  military  aircraft
   belong to separate markets. Each of these two segments have  specific  characteristics  such  as  different  components,  equipment,  aircraft
   platforms, design, know-how and usage (aircraft usage is far less intense in the military sector). In addition, military engines  are  subject
   to particular qualification tests, certification authorities, airworthiness  regulations  or  confidentiality  requirements.  It  was  however
   acknowledged by some respondents that, from a technical point of view, a provider of MRO services for civil aircraft can perform MRO  services
   for military aircraft.[37]

44. Similarly, the Notifying Party submits that MRO for aero-derivatives engines[38] is distinct from MRO for the aircraft engines on which  they
   are based. Although the market investigation did not determine whether a segmentation between MRO for  aircraft  engines  and  MRO  for  aero-
   derivatives engines in general is appropriate, the majority of the respondents to the Commission's requests for information  agreed  that  MRO
   providers for aircraft engines have the capability/capacity to provide MRO services for aero-derivatives engines.[39]

45. In the present case, the Commission considers that the exact product market definition for the supply  of  MRO  can  be  left  open,  as  the
   notified operation does not raise serious doubts under any possible approach.

6 Power Gearboxes ("PGBs")

46. In an aircraft engine, the transfer of mechanical power is accomplished by means of a PGB, which transmits the engine's power  to  drive  the
    propeller, rotor blade or turbine fan, and, most importantly, manage the speed at which they rotate. Regardless of application, all PGBs  are
    designed to accommodate high power loads in a relatively small area of space, which leads to high power density.

47. PGBs are predominantly used in turboprop engines and helicopter airframes. Traditionally, turbofan engines for large commercial and  regional
    aircraft are direct drive configurations and do not use PGBs, although PGBs have been in use on turbofans regional  jets  and  business  jets
    since the 1970s. For example, Honeywell's TFE731, ALF502 and LF507 are all geared turbofan engines used  on  various  Learjets,  Cessnas  and
    Dassault business jets as well as the Avro regional jet.

48. P&W has recently developed a turbofan engine (the PW1000G Geared Turbo-Fan family) which uses a  PGB  (also  known  as  the  Fan  Drive  Gear
    System, "FDGS"). Engines from this family will equip the Mitsubishi Regional Jet[40] (PW1200G engine), the Bombardier  C-Series[41]  (PW1500G
    engine), the Irkut MC-21[42] (PW1400G), and the Airbus A320neo[43] (PW1100G engine).

                                                         Figure 3: Geared turbofan engine

                                                                       […]

                                                             Source: Notifying Party

49. The Notifying Party submits that the relevant product market should be the market for the manufacture of all PGBs, regardless of  the  engine
    type (that is to say turboprop, turboshaft and turbofan) due to the high degree of supply-side substitutability. The Notifying Party stresses
    that PGBs cannot be substituted by any other type of gearboxes or engine components and that they constitute a separate product market.

50. The market investigation confirmed that PGBs are designed as complete  modules[44]  but  some  answers  suggest  that  the  following  market
    segmentations may also be relevant: (i) PGBs for helicopters vs. PGBs for other type of aircraft, (ii) PGBs for large commercial aircraft vs.
    PGBs for other types of aircraft.[45]

51. In any event, the Commission considers that the exact product market definition for the supply of PGBs can be  left  open,  as  the  proposed
    transaction does not raise serious doubts under any possible approach.

7 Accessory Drive Trains ("ADTs")

52. According to the Notifying Party, in an aircraft engine the accessory drive train ("ADT") transfers power from the  engine  shaft  to  engine
   accessories such as generators and fuel and oil pumps and is composed of (1) an AGB, (2) a transfer gearbox  ("TGB"),  (3)  an  inlet  gearbox
   ("IGB") and (4) accessory drive shafts ("ADSs"). In a typical configuration, the IGB takes power from the engine shaft and  drives  the  ADSs,
   running through the TGB and after into the AGB.

                                                   Figure 4: ADT and its constituent components

                                                                      [pic]

                                                             Source: Notifying Party

53. Apart from providing propulsion for the aircraft, the engine  also  provides  power  for  auxiliary  systems.  The  ADTs  are  the  means  of
   transferring mechanical power from the engine shaft to electrical and hydraulic systems such as fuel pumps, oil pumps and  starters  but  also
   aircraft systems such as avionics, hydraulic pumps or power generators. Supply of power to engine accessories and aircraft systems is critical
   to keep the aircraft airborne and passengers supplied with air, heat and light. The  Notifying  Party  explains  that  ADT  components  for  a
   particular engine are usually designed by a single supplier or the engine OEM.[46] According to the Notifying Party, after the  design  phase,
   different suppliers can supply different components on a build-to-print, "mix-and-match" basis.

54. The Commission has not considered ADTs in previous decisions. The Notifying Party claims that although the individual ADT gearboxes  such  as
   the AGB, IGB and TGB each perform different roles within an aircraft engine, they should not be viewed separately from the ADT as a whole.  In
   particular, the Notifying Party puts forward that ADT manufacturers do not specialise in  the  production  of  a  single  component  only.  In
   addition, the Notifying Party explains that although it is common for a single supplier to supply the entire ADT, having a single supplier for
   each individual ADT component is not an "essential aspect". Finally, the  Notifying  Party  claims  that  the  engine  OEM  customers  do  not
   necessarily rely on ADT suppliers to integrate the various individual components  into  a  single  module  and  are  able  to  integrate  them
   themselves.

55. Moreover, the Notifying Party argues that although suppliers may not supply each individual component across all segments of aircraft,  there
   are no technical or design barriers that would prevent a supplier of any ADT component for a certain type of engine from supplying for another
   type of engine and hence there would be no barriers for manufacturers for instance currently active in ADTs  for  small/military  aircraft  to
   produce for LCAs.

56. The Notifying Party thus argues that the relevant product market for ADTs is  the  manufacture  of  ADTs  for  all  commercial  and  military
   aircraft engines.

57. The market investigation confirmed that the ADT transfers power from the engine shaft to engine accessories and is generally composed of  the
   constituent parts as listed in paragraph 52. It was also pointed out that the IGB typically has a gear on the engine  centreline  and  is  not
   always supplied by the AGB provider, and that some engines, due to a different architecture, can also have a so called step-aside gearbox.[47]
   It was overwhelmingly confirmed that the AGB is the most crucial constituent part of the ADT.[48]

58. Customers confirmed that they do not require their ADT suppliers to be able  to  design  and  manufacture  a  complete  ADT  module,[49]  and
   competitors stated that in order to be considered as a credible supplier in the ADT market, it is not necessary  to  be  able  to  design  and
   manufacture a complete ADT module.[50] ADTs are sometimes designed as a complete stand-alone module and sometimes their constituent parts  are
   designed separately.[51] Finally, there are competitors who supply the entire ADT module, but others are  specialised  in  certain  components
   only.[52]

59. The market investigation was inconclusive as to the question whether suppliers of ADT components for smaller engines such as  those  used  on
   regional aircraft would be able to manufacture ADTs or their components for larger engines. Whilst the majority of competitors indicated  that
   it could be possible ("Scale design to be applied from smaller to larger engines (Same Technology)", "probably most of them,  based  on  their
   manufacturing capabilities"[53]), customers generally stated the contrary.[54]

60. In any event, the Commission considers that the exact product market definition, that is to say whether ADTs as  a  complete  module  or  its
    components separately constitute the relevant product market and whether ADTs should be further subdivided by aircraft engine  type,  can  be
    left open as the proposed transaction does not raise serious doubts under any possible approach.

4 Geographic market definition – upstream markets

61. The Commission has indicated in prior decisions[55] that the market for the supply of goods to aircraft  engine  manufacturers  is  worldwide
   due to the physical presence of the same suppliers throughout the world and the worldwide purchasing policy of aircraft manufacturers, as well
   as low transportation costs. The Notifying Party shares this view.

62. In addition, the Notifying Party also submits, in line with the Commission's previous practice, that the geographic scope  of  the  component
   maintenance market is worldwide[56] whereas that for engine maintenance  is  at  least  EEA-wide.[57]  As  the  Parties  have  no  overlapping
   activities in line and heavy maintenance, these markets will not be further discussed in this decision.  With  respect  to  MRO  for  military
   aircraft, the Notifying Party submits that the market is national in scope.

63. The market investigation supports the Notifying Party's view regarding the supply of components. The vast  majority  of  respondents  to  the
    Commission's requests for information confirmed[58] that competitive conditions  for  civil  aircraft  components  are  the  same  worldwide,
    procurement and other strategy decisions are taken globally and pricing decisions do not differ across the various regions of the  world.[59]
    The market investigation also confirmed the Commission's previous findings concerning the geographic scope for component maintenance, but was
    not conclusive on the geographic scope of MRO for military aircraft. The majority  of  the  respondents  to  the  Commission's  requests  for
    information indicated that the geographic scope of the MRO for aero-derivatives is worldwide.[60]

64. The Commission considers that the relevant geographic scope for the supply of components to aircraft engine manufacturers,  as  well  as  for
    the supply of component maintenance and MRO for aero-derivatives is worldwide. As regards the  supply  of  MRO  for  military  aircraft,  the
    precise market definition can be left open as the proposed transaction does not raise serious doubts under any possible approach.

5 Product and geographic market definition: downstream market – aircraft engines

65. As explained above in Section V.2, the main vertical relationship resulting from this transaction is between GE's  aircraft  engine  business
   (downstream) and Avio’s engine component business (upstream).

66. In its previous practice regarding aircraft engines,[61] the Commission has considered that the downstream markets for jet engines should  be
   defined according to the “mission profile” of the aircraft on which the engine is deployed (that is to say, the purpose for which the aircraft
   is purchased, determined by reference to the aircraft’s seating capacity, flying range, price and  operational  cost)  .  On  that  basis,  in
   GE/Honeywell, the following four distinct jet engine markets were distinguished:

    - engines for large commercial aircraft (> 100 passengers, range of 2000 to 8000  nautical  miles),  which  include  narrow-body/single-aisle
      aircraft and wide-body/double-aisle aircraft ("LCA");

   -  jet engines for large regional aircraft (> 70 passengers, range up to 2000 nautical miles ("LRA");

   -  jet engines for small regional aircraft (30-50 passengers, range up to 2000 nautical miles) ("SRA");

   -  jet engines for corporate aircraft.

67. However, in UTC/Goodrich the precise product market definition as regards engines was left open, as the assessment of  the  vertical  effects
   of the transaction in relation to engines did not depend on the precise scope of the engine market.[62]

68. In the case at hand, the Notifying Party submits that the appropriate market definition that needs to be adopted to analyse  the  effects  of
   the proposed transaction is that of aircraft engines that are suitable and compete for individual aircraft  platforms.  Aircraft  engines  are
   differentiated products which are designed and manufactured for a specific aircraft platform. Engines are tailor-made for an aircraft platform
   and customers (both airframers and end-customers) cannot utilize engines which do not meet the specific  requirements  of  a  given  platform.
   Likewise, they are unable to switch to engines which have not been certified for this platform (if there is more than one certified engine).

69. The Notifying Party therefore considers that since an engine customer cannot substitute any non-certified engine on a specific  aircraft  and
   that aircraft certification is a long-term process, engine OEMs are not able (regardless of their market position) to provide a  substitutable
   engine for a given platform in the short term. Therefore, only other certified engines (and, for  new  platforms,  those  whose  certification
   process is ongoing) are potential alternatives for a given platform and the competitive dynamics should be assessed at a platform level  where
   engines compete.

70. Moreover, the Notifying Party argues that even if a customer (for example an airline) wants to switch across engines certified for  the  same
   platform, it needs to incur additional expenses, in form of sunk investments, including training of pilots, flight crew and  maintenance  crew
   on the new engines, hiring additional personnel, etc.[63] Similar types of additional sunk investments,  albeit  of  an  increased  magnitude,
   would be required in case of switching to competing aircrafts.

71. Overall, the Notifying Party suggested that a platform-by-platform analysis is more informative for the vertical analysis  required  in  this
   case. In order to assess the merged entity's potential ability and incentives to foreclose, the Commission would need to focus its  assessment
   on the specific aircraft platforms and related engines that could potentially be affected by a foreclosure strategy (such as  the  A320neo  or
   the A380), as opposed to all engines for a broad category of aircraft taken together – some of the engines of a given  category  (for  example
   large commercial aircraft) may not be certified on the platform at stake.

72. While the Commission acknowledges that substitution to a different aircraft in the market would imply additional costs  and  investments  (on
   the top of the costs of switching across engines on the same platform), it also considers that these  additional  costs  and  investments  are
   substantially lower in case of switching to an engine under development for a competing aircraft as in that case the  airlines  have  not  yet
   sunk their investments.

73. The market investigation was not fully conclusive as to the potential segmentations of the engine market. Some of the  airframers  considered
   that competitive conditions are the same across aircraft categories, independently of the size and purpose of the  programme.[64]  Others  put
   forward that manufacturing techniques and technology are similar irrespective of the size of the programme, but that the  required  investment
   and marketing vary with the size of the programme (and also with the size of the organization and market dynamics).[65]

74. In any event, as the concerns expressed by engine manufacturers (see below) were specific to particular platforms, it  appears  that,  as  in
   UTC/Goodrich, the assessment of the vertical effects of the transaction in relation to engines does not depend on the  precise  scope  of  the
   engine market. The competitive assessment will therefore focus on these platforms independently of the  precise  delineation  of  the  product
   market for aircraft engines, which can be left open.

75. As regards the geographic scope of the engine markets, the market investigation confirmed the Commission's finding in GE/Honeywell  that  all
   civil engine markets are worldwide.

    Competitive Assessment – horizontal issues

1 Combustion Chambers ("CCs")

76. There is a limited overlap between the Parties' activities as both GE (through its UEC business) and Avio supply CCs for helicopters.[66]

77. However, GE supplies CCs for only […] applications: the […] (which powers the […]) and the […] (for which it only provides  […]%  of  the  CC
   supply requirements). Avio supplies the […] which powers various turboshaft platforms.

78. According to the Parties' estimates, since the […] engines have a share of [10-20%]%, while the […] have a combined  share  of  [5-10]%,  the
    Parties' combined market share on a market for CCs for helicopters, taking into account the limited supplies to the […]  engine,  would  only
    amount to [10-20]%.[67] In addition, there are many alternative CC suppliers (see the  analysis  on  the  vertical  issues  below).  This  is
    confirmed by a respondent to the Commission's request for information which explained that the transaction "will somewhat reduce  the  number
    of capable CC suppliers to helicopter engines, but we do not view the overall impact as being significant".[68]

79. In light of the foregoing, the Commission considers that the transaction does not raise serious doubts as regards its  horizontal  impact  on
    the CC market.

2 Turbine Exhaust Cases ("TECs")

80. The activities of both GE (through its Unison business) and Avio horizontally overlap on the market for TECs.

81. Most of GE's production of TECs is for captive use and the only TECs that GE produces for third parties  are  those  for  […]  engine  range,
   which powers certain very light business jets such as the […].[69] GE estimates it holds a market share of [30-40%]% in the TECs for the light
   business jet segment.

82. Unlike GE, Avio supplies TECs for engines intended for use on midsize business jets:[70] first it supplies TECs for the PW308  which  is  the
   sole power option on the Hawker 4000 business jet (Hawker Beechcraft) and the Falcon 2000 (Dassault). Avio was also selected to  provide  TECs
   for the […] which was announced as the engine for the […] but the  application  was  eventually  cancelled  in  [year].  The  Notifying  Party
   estimates that Avio holds a share of [10-20]% in TECs for the midsize business jet TECs segment. If distinct markets between  TECs  for  light
   business jets and TECs for midsize business jets are considered, there is no horizontal overlap between the Parties' activities  in  TECs.  In
   the potential market for TECs for the entire business jet segment, the Notifying Party estimates that the merged entity holds a limited  share
   of [10-20]% (GE [10-20]%, Avio [5-10]%).

83. The Notifying Party has not been able to supply market shares  of  its  competitors  as  regards  TECs  for  business  jets  but  the  market
   investigation indicated that several players are active in this market including MTU and ITP. No concerns were voiced during the investigation
   as regards the horizontal aspects of the merger for TECs and the horizontal impact of the merger as regards TECs is limited.

84. In the light of the above, the Commission considers that the transaction does not raise serious doubts as regards its  horizontal  impact  on
   the TECs market.

3 Maintenance, Repair and Overhaul ("MRO")

85. There are limited horizontal overlaps between the Parties with respect to MRO services  for  components  for  commercial  aircraft,  MRO  for
   military engines,[71] as well as MRO for aero-derivative engines.

86. Avio provides MRO services for components of the GE90 engine, in particular LPT nozzles, AGB  face  seals,  and  IGBs.  Although  Avio  could
   compete for further component MRO work on the GE90, in practice such work is largely performed by GE itself. No concerns  were  raised  during
   the market investigation with respect to MRO for components.

87. With respect to aero-derivative engines, Avio provides MRO services for the LM2500  family  of  engines[72]  (military  and  commercial).  GE
   performs services for […]. As for aero-derivative commercial engines, Avio's market share for LM2500 engines is [5-10]%,[73] while  GE  has  a
   market share of [50-60]%. Other competitors are ANZ ([5-10]%), MTU ([20-30]%), TCT ([5-10]%) and other  unlicensed  providers  ([5-10]%).  The
   Notifying Party submits that given Avio's limited presence in the market and the presence of other providers of MRO  services  for  commercial
   aero-derivative services, the proposed transaction is unlikely to change significantly the current market structure.

88. The market investigation did not raise substantiated concerns with respect to aero-derivative MRO. Moreover, as the  holder  of  the  licence
   for the LM 2500 engine family, GE can decide to limit or provide licence access to other MRO suppliers  even  pre-merger.  Thus  the  proposed
   transaction does not significantly change the market for MRO aero-derivatives.

89. In the light of the above, the Commission considers that the transaction does not raise serious doubts as regards its  horizontal  impact  on
   the MRO market.

    Competitive Assessment – vertical issues

90. As Avio is a supplier of engine components and  GE  is  an  engine  manufacturer,  the  principal  relationships  involved  in  the  proposed
   transaction are vertical. More specifically, given that GE sources only a small part of its requirements  for  the  relevant  components  from
   Avio's competitors, the proposed transaction is mostly susceptible of raising input foreclosure concerns.

91. In this regard, two main potential foreclosure scenarios could occur. The first one consists of foreclosure on engine-to-engine  competition.
   Such a scenario would typically occur in cases where airframers (such as Airbus) certify more than one engine on a given aircraft platform and
   therefore give customers a choice between rivals' engines. Where a GE engine  competes  directly  with  another  engine  option  on  the  same
   platform, GE could try to disrupt upstream supplies of Avio products to that competing engine in order  to  divert  sales  to  the  GE  engine
   option.[74] Currently, there are four engines supplied by Avio that compete directly with a GE (or a GE JV)  engine  for  platforms  that  are
   currently in-production or shortly to enter into service (for example the Airbus A320neo):

                                          Table 1: Aircraft where there is engine-to-engine competition

|Name of competing manufacturer and engine|GE or GE JV engine                       |Platform                                 |
|P&W                                      |GE CF6 80E1                              |Airbus A330                              |
|PW4000                                   |GE CF6 80C2                              |Boeing 767                               |
|                                         |GE 90                                    |Boeing 777                               |
|P&W                                      |CFMI                                     |Airbus A320neo                           |
|PW1100G                                  |LEAP-1A                                  |                                         |
|IAE                                      |CFMI                                     |Airbus A320 family                       |
|V2500                                    |CFM56-5                                  |                                         |
|RR                                       |Engine Alliance                          |Airbus A380                              |
|Trent 900                                |GP7200                                   |                                         |

   Source: Notifying Party

92. The second main foreclosure scenario concerns aircraft-to-aircraft competition. This  would  typically  occur  where  one  non-GE  engine  is
   certified for a given aircraft platform and GE or a GE JV offers its own engine on a competing platform. To succeed, any foreclosure  strategy
   would require that the sales are diverted to an entirely different aircraft.

1 Low Pressure Turbines ("LPTs")

93. The transaction gives rise to a vertical link between the upstream supply of LPTs, where  Avio  is  active,  and  the  downstream  supply  of
   aircraft engines, where GE is active. In particular, Avio supplies LPTs for: GE and CFMI engines in the large commercial aircraft segment;[75]
   GE engines in the helicopter and military segments;[76] and engines from GE’s competitors which power business jets and military aircraft.

94. In particular, there are five rival engine OEM programmes on which Avio is an LPT supplier:

    – The RR Trent 500 is the sole engine option on the wide-body Airbus A340-500 and -600.

    – The P&W PW308 is a turbofan engine which is the sole power option on the Hawker 4000 and the Dassault Falcon 2000 business jets.

    – The Turbo-Union RB 199 is a turbofan jet engine which powers the Panavia Tornado combat aircraft.

    – The Eurojet 200 is a turbofan jet engine powering the Eurofighter Typhoon.

    – The P&W F135 is a turbofan jet engine powering the Lockheed F-35 II Joint Strike Fighter ("JSF").

95. Table 2 shows the Notifying Party's estimates for the worldwide market shares in LPTs split per the various aircraft size segments  in  which
   Avio is present.[77]

                                 Table 2: Worldwide LPT market shares according to aircraft size – installed base

|          |GE[78]          |P&W                                |Snecma                    |Avio                             |
|F135      |F-35 II JSF     |F/A-18 E/F Super Hornet (F414)     |F-16 Falcon/Viper (F100)  |EuroFighter Typhoon (EJ200)      |
|          |                |F-16 Falcon/Viper (F110)           |F-15 Strike Eagle (F100)  |Rafale Dassault (Snecma M88)     |
|          |                |F-15 Strike Eagle (F110)           |                          |MiG-29 (Klimov RD-33)            |
|          |                |SAAB Gripen E/F (F414)             |                          |MiG-35 (Klimov RD-33)            |
|          |                |                                   |                          |Su-20 (NPO Saturn AL-31)         |
|PW308     |Hawker 4000     |Bombardier Challenger 605 (CF34-3A)|-                         |Bombardier Challenger 300        |
|          |                |                                   |                          |(Honeywell HTF7000)              |
|          |                |                                   |                          |Embraer Legacy 600               |
|          |                |                                   |                          |(RR AE3007)                      |
|          |                |                                   |                          |Gulfstream G280                  |
|          |                |                                   |                          |(Honeywell HTF 7250)             |
|          |                |                                   |                          |Cessna Citation X                |
|          |                |                                   |                          |(RR AE3007)                      |
|          |Dassault 2000   |Bombardier Challenger 605 (CF34-3A)|-                         |Embraer Legacy 600               |
|          |                |                                   |                          |(RR AE3007)                      |
|          |                |                                   |                          |Gulfstream G280                  |
|          |                |                                   |                          |(Honeywell HTF 7250)             |
|          |                |                                   |                          |Cessna Citation Longitude (Snecma|
|          |                |                                   |                          |Silvercrest)                     |

   Source: Notifying Party

96. With respect to future programmes, the Notifying Party argues that the merged entity would not have the ability to foreclose input given  the
   existence of alternative competitors and the long lead times on engine and engine component delivery, which would  allow  the  customer/engine
   OEM for sufficient time to switch supplier. This would hold especially true with respect to future programmes where the engine OEMs would have
   very distant deadlines.

97. The results of the market investigation indicated that a potential input foreclosure scenario is unlikely regarding both existing and  future
   programmes.

98. Regarding existing relationships, the fact that there are a number of non-GE powered aircraft competing with the  PW308  indicates  that  the
   likelihood that GE would be able to divert sales to its programmes is very small. In that respect, it is to be emphasised that the merger will
   not provide GE with access to information on aircraft buyers'  preferences  or  other  means  that  could  reduce  the  uncertainty  that  the
   foreclosure would benefit sales of aircraft platforms that are not powered by GE. Furthermore, while the F135-powered JSF is  a  state-of-the-
   art platform still in development and it is not expected to enter into service before 2016, the GE-powered platforms which  according  to  the
   Notifying Party would compete with the JSF have already been in  production  for  decades,  which  suggests  that  […]  they  are  not  really
   substitutable to the JSF. In any event, not only the supply of LPTs for the PW308 and the F135 are protected by so-called Long Term Agreements
   ("LTAs"), but also the latter have been further amended by the Commercial Assurances Agreement between GE and P&W after  the  announcement  of
   the proposed transaction.

99. With respect to future programmes, while customers pointed out that the incentive for  Avio  and  GE’s  competitors  to  agree  on  a  supply
   relationship may decrease and lead to a reduction in the  number  of  available  suppliers,[82]  there  would  remain  sufficient  alternative
   suppliers with design capability in the market (for example ITP, IHI and MTU) while  other  companies  have  manufacturing  capabilities  (for
   example GKN VolvoAero, JAEC, KHI, Mitsubishi Heavy Industries "MHI") and there are a number of potential entrants.[83] In addition,  not  only
   engine OEMs are able to design and manufacture LPTs, or would be able to do it following some investment,[84] but they are able to sponsor the
   entry of new suppliers, as evidenced by RR’s creation of the ITP joint-venture.[85]

100. As regards the risk of a potential customer foreclosure, it is unlikely that competitors will be foreclosed from a significant share of  the
   downstream market given the fact that GE is not a significant customer in business jets, GE’s sourcing from Avio represented [10-20]% of  GE’s
   total LPT sourcing in 2011 and Avio's LPT sales to GE represented [70-80]% of Avio's total LPT sales in 2011. For example, Avio is involved in
   many of GE's large commercial aircraft engines, including the CF6-80C2 (Boeing 767), CF6-80E1 (Airbus A330), GE90 (Boeing 777)  and  the  GEnx
   (Boeing787). As explained by one competitor, “there can be more opportunities for suppliers which compete with Avio on other  than  GE  engine
   programme[s] because Avio might dedicate to GE engine programme[s] in the future.”[86]

101. Therefore, the Commission considers that the proposed transaction does not raise serious doubts as to its compatibility  with  the  internal
   market with respect to the vertical relationship between LPTs and aircraft engines.

2 Combustion Chambers ("CCs")

102. Avio supplies CCs, none of which it designed, on the following engine programmes:

    – the SaM146 which powers the Sukhoi Superjet 100;

    – the PW100 family (in particular the PW127 which is the only engine still in large scale production) and the PT6 which are P&W engines  that
      power a large number of turboprop aircraft;[87] and

    – the Tay Mk 611-8C which powers the Gulfstream G350 and G450.

103. None of the abovementioned aircraft offers a GE or GE JV engine option, therefore the only form of competition with GE or GE JV  engines  is
   indirect, that is to say aircraft-to-aircraft competition.

104. Avio's market share on an overall market for CCs, regardless of the type of aircraft, would be [0-5]% for the installed base and [5-10]%  in
   order backlog. Apart from the CC segment for helicopters where Avio's market share is estimated at [5-10]%, Avio is present  in  the  business
   jet segment with an estimated market share of [0-5]%[88] and the large regional jet segment where it holds a [90-100]% market  share  for  the
   installed base of CCs and [70-80]% for the order backlog (with MHI accounting for the remaining [20-30]% market share). However, these  market
   shares overestimate Avio's influence upstream since there are many other  alternative  CCs  suppliers  to  which  the  OEMs  could  switch  if
   necessary. Indeed, the market investigation confirmed that the OEMs  are  generally  responsible  for  the  design  of  the  CCs  whereas  the
   manufacture is usually done either by themselves (for internal use) or by  fabrications  suppliers  chosen  by  tender.[89]  A  customer  even
   explained that "CC manufacturing does not require a very distinctive manufacturing capability: even special processes used on modern  CCs  […]
   are easily accessible. Therefore, a competitive open market exists which is addressed by  tender".[90]  Apart  from  the  engine  OEMs,  which
   generally have design and build-to-print capabilities, the alternative existing or potential CCs suppliers include MHI, Samsung Techwin,  GKN,
   JAEC, Danville Metal Stamping, and TurboCombustor Technology.

105. In Avio's case, it should be noted that the CCs it supplies have been designed  by  the  OEMs  who  could  switch  to  other  build-to-print
   manufacturers.[91]

106. Furthermore, as regards the PW100 family and the PT6, it should be  noted  that  these  programmes  have  been  amended  by  the  commercial
   assurances agreement mentioned below. In particular, P&W and the Parties have agreed to implement […].

107. As regards the Tay Mk 611-8C, it should be noted that the agreement between RR and Avio provides that […]. This has been  addressed  in  the
   deed of amendment mentioned below, which foresees that RR and Avio […].

108. Therefore, given the numerous alternative suppliers and the specifically tailored agreements entered  into  at  the  time  of  the  proposed
   transaction, Avio would not have the ability to foreclose access to inputs for GE's competitors regarding CCs.

109. As regards incentives to foreclose, it should be noted that the platforms powered by engines for which Avio supplies CCs compete  with  many
   other platforms, a number of which are not powered by GE or GE JV engines.

110. First, the Sukhoi Superjet 100 competes with the MRJ (powered by the PW1200G), the Antonov AN-148 (Progress D-436), the  new  Embraer  E-Jet
   (powered by the PW1700G and PW1900G) and only two GE-powered engines on platforms that are currently out of production or  being  phased  out:
   the Bombardier CRJ (CF34) and the Embraer E-Jet (CF34). Since the GE platforms are out of production or being phased out, it is unlikely  that
   a customer would switch to such platforms.

111. Second, the PW100 family powers a large number of aircraft,[92] none of which competes with an in-production GE engine. The  only  potential
    overlap would occur between the P&W-powered EADS-CASA C-295  military  transport  aircraft  and  the  GE-powered  CASA/IPTN  CN-235  military
    transport aircraft. Although both are military transport aircraft, the platforms have very different mission profiles.  The  CN-235  is  much
    smaller than the C-295 and has a slightly shorter range (4,355 km to 4,600 km). However, even if these aircraft were considered  to  compete,
    there would still be many non-GE-powered options, including the Alenia C-27J Spartan (RR AE2100), C-130J Super  Hercules  (RR  AE2100),  V-22
    Osprey (RR AE1107), A400M Atlas (TP400-D6) and Antonov A-70 (Progress D-27).

112. Third, the PT6 engine, for which both Avio and P&W manufacture CCs, powers an even  larger  number  of  aircraft.[93]  The  only  GE-powered
    engine that would compete with the PT6 on comparable platforms would be the H80, which was certified in 2012 on only three aircraft:

  – the Thrush 510G, which is an agricultural aircraft that would compete generally with a number of PT6-powered  aircraft  such  as  the  Thrush
    510P, 550P, 660 and 710P, the Air Tractor 401B 402B, 502B, 504, 602 and 802A, the  Pacific  Aerospace  P-750  XSTOL,  the  Pacific  Aerospace
    CRESCO, the Embraer EMB 202 Ipanema (Lycoming IO-540-K1J5), the GippsAero GA200 Fatman (Lycoming I0-540- K1A5), PZL-Mielec M-18 Dromader (WSK
    "PZL-Kalisz" ASz-62IR) and PZL-Mielec M-18 Dromader (WSK "PZL-Kalisz" ASz-62IR).

  – the Aircraft Industries L410, which is a small commuter plane, capable of carrying under 20 passengers and originally powered by  the  Walter
    M601 engine. Comparable aircraft include the Britten-Norman Islander (Lycoming O-540-E4C5), CASA C-212 Aviocar (Garrett  AiResearch  TPE-331-
    10R-513C), Dornier Do 228 (Garrett AiResearch TPE-331-5-252D),[94] Harbin Y-12 (P&W PT6) and PZL M28 Skytruck (P&W PT6).

  – the Technoavia Rysachok, a planned Russian aircraft that will be a twin turboprop-powered engine  light  utility  aircraft.  It  will  likely
    compete with the Aircraft Industries L410 and similar aircraft described above, as well as passenger and training  aircraft  including  those
    offered by Cessna (208A Caravan (P&W PT6), 208B Grand Caravan EX (P&W PT6), 208B Super Cargomaster EX (P&W PT6)), Extra EA-500 (RR 250-B17F),
    GippsAero G8 Airvan (Textron Lycoming IO-540-K1A5), G10 (RR 250-B17F)), Pilatus (PC-6 (P&W PT6), PC-12NG (P&W  PT6)),  Piper  (Meridian  (P&W
    PT6), Malibu  (Continental  TSIO-520-BE),  Seneca  (Continental  TSIO-360RB),  Seminole  (Lycoming  O-360-A1H6),  Arrow  (Lycoming  O-320-E2A
    Sensenich), and Archer (Lycoming O-360-A4M)) and Quest Kodiak (P&W PT6).

113. Fourth, the Tay powers two engines that are now out of production:

  – The G450, which is a large-class business jet and which does not currently compete with any GE-powered platform.  It  is  expected  that  the
    Bombardier Global 7000/8000 (powered by the GE Passport) will enter into service in 2017 and 2018  respectively;  however,  there  are  other
    competing aircraft such as the newer Gulfstream G500/G550 (RR BR710), Gulfstream  G650  (RR  BR725),  Dassault  Falcon  7X  (P&W  PW307)  and
    Bombardier Global 5000/6000 (RR BR710). The Tay-powered and the GE-powered platforms are unlikely to compete with one another as one  is  out
    of production whereas the other will enter into service in a couple of years. Furthermore, GE's incentive to continue  to  supply  spare  and
    replacement parts is guaranteed by aftermarkets revenues.

  – The G350, which is a medium-class business jet and which competes with two old GE-powered aircraft, namely the Bombardier Challenger 605  and
    850. These two aircraft account for a total of only [5-10]% of the medium-class business jet segment  (and  [0-5]%  of  all  business  jets),
    indicating an inability to capture downstream sales.

114. Given the availability of several non-GE powered platforms that closely compete against the aircraft powered by engines  with  an  Avio  CC,
    the likelihood of diversion of a customer's purchase from an aircraft powered by a rival's engine to an aircraft powered by a  GE  engine  is
    unlikely. GE would have no guarantee that an attempted input foreclosure strategy would result in a successful diversion to a GE engine.

115. As regards the risk of a potential customer foreclosure, it is unlikely that competitors will be foreclosed from a significant share of  the
    downstream market given the fact that (i) GE is not a significant customer in business jets, (ii) GE has many significant competitors in  the
    helicopter segment (GE's estimated market share is [20-30]%, RR's is [20-30]%, Turbomeca's (Safran) is [20-30]% and P&W's is  [10-20]%),  and
    (iii) as regards large regional jets, GE sources [a certain part of its] CC  requirements  internally.  In  addition,  competitors  who  have
    replied to the Commission's requests for information indicated that the merger would not affect negatively their ability to compete.[95]

116. In light of the foregoing, the Commission considers that the proposed transaction does not raise serious  doubts  as  to  its  compatibility
    with the internal market with respect to the vertical relationship between CCs and aircraft engines.

3 Turbine Exhaust Cases ("TECs")

117. Avio supplies P&W with TECs for the PW308 engine which equips the Hawker 4000 business jet and the Falcon 2000.  As  GE  does  not  offer  a
   competing engine on these aircraft the only form of competition with GE-powered engines is  indirect,  that  is  to  say  aircraft-to-aircraft
   competition.

118. As discussed, Avio holds a limited position in the market for TECs for business jets. During the market investigation, customers  identified
   several alternatives to Avio as a TEC designer and supplier, such as MTU, ITP and GKN VolvoAero.[96] P&W itself indicated  that  it  currently
   designs TECs for some of its engines for business jets, such as the PW600 range.[97] It does not appear therefore that Avio has the ability to
   foreclose access to inputs for GE competitors regarding TECs in the light of the numerous alternatives that exist in the market.

119. As regards the incentive to foreclose, it appears that the Hawker 4000 and the Falcon 2000 compete with platforms which are  powered  by  GE
   engines such as the Bombardier Challenger 605. The Notifying Party however submitted that these aircraft compete with several  airplanes  with
   non-GE engine option such as the Bombardier Challenger 300 (powered by a Honeywell engine), the Embraer Legacy 600 (powered by a  RR  engine),
   the Embraer Legacy 400 (RR engine) the Gulfstream G280 (Honeywell engine) and the Gulfstream G450 (RR engine). This wide availability of  non-
   GE powered aircraft in competition with platforms equipped with the PW308 was confirmed  by  respondents  to  the  Commission's  requests  for
   information.[98]

120. Given the availability of several non-GE powered platforms that closely compete against PW308-powered aircraft, the likelihood of  diversion
   of a customer's purchase from an aircraft powered by a rival's engine to an aircraft powered by a GE engine is  unlikely.  GE  would  have  no
   guarantee that an attempted input foreclosure strategy would result in a successful diversion to a GE engine.

121. As regards the risk of a potential customer foreclosure, and although some concerns were voiced in the investigation as regards  the  future
   availability of Avio as a TEC supplier, it is unlikely that competitors will be foreclosed from a significant share of the  downstream  market
   given the fact that GE is not a significant customer in business jets, which is the main area of competence of Avio in TECs. For  other  types
   of aircraft, GE already sources most of its TECs from [a supplier] and it is unlikely that this policy will change as a result of the proposed
   transaction.

122. In view of the above, the Commission considers that the proposed transaction does not raise serious doubts as to its compatibility with  the
   internal market with respect to the vertical relationship between TECs and aircraft engines.

4 Oil Pumps and Oil Tanks

123. Avio currently supplies oil pumps and tanks on a number of engine programmes. According to the Notifying Party, Avio as a  rule  submits  an
   aggregate offer to supply the lubrication systems together with the ADT, that is to say together with the oil pump and/or oil tank.

124. Avio supplies oil pumps and/or tanks for the following non-GE engines:

                               Table 4: Avio's involvement on non-GE engines with regard to oil pumps and/or tanks

|Avio's involvement   |Engine                |Engine OEM          |Aircraft platform       |Type of aircraft                    |
|Oil tank (together   |PW1100G               |P&W                 |A320neo family          |Large commercial aircraft, large    |
|with the ADT)        |                      |                    |                        |regional aircraft (turbofan)        |
|Design               |                      |                    |                        |                                    |
|Oil pump/tank        |IAE V2500             |P&W (JV)            |A320 family             |Large commercial aircraft, large    |
|(together with the   |                      |                    |                        |regional aircraft (turbofan)        |
|ADT)                 |                      |                    |                        |                                    |
|Design               |                      |                    |                        |                                    |
|Oil pump/tank        |Trent 900             |RR                  |A380                    |Large commercial aircraft, large    |
|(together with the   |                      |                    |                        |regional aircraft (turbofan)        |
|ADT)                 |                      |                    |                        |                                    |
|Design               |                      |                    |                        |                                    |
|Oil tank (together   |PW4000                |P&W                 |A330, Boeing 767 and 777|Large commercial aircraft, large    |
|with the ADT)        |                      |                    |                        |regional aircraft (turbofan)        |
|Build-to-print       |                      |                    |                        |                                    |

   Source: Notifying Party

125. The Notifying Party argues that no input foreclosure issues arise either in relation to oil pumps or oil tanks.[99]

126. The Notifying Party notes first that neither oil pumps nor oil tanks form the core part  of  Avio's  business  and  at  least  part  of  the
   production of these components can be and indeed is usually outsourced.[100]

127. Second, the Notifying Party submits that oil pumps and tanks on the engine programmes in question are supplied under life of programme  LTAs
   (see below). As argued for other components, the Notifying Party claims  that  these  LTAs  give  the  competing  downstream  OEMs  sufficient
   protection in terms of price, quality and delivery terms and enables them to terminate the contract […]. Lastly, according  to  the  Notifying
   Party, Avio lacks the ability to influence the upstream market significantly as Avio's share in large commercial and regional aircraft is [10-
   20]%/[10-20]% (installed base/order backlog respectively) for oil pumps and [10-20]%/[20-30]% (installed base/order backlog respectively)  for
   oil tanks.[101] Moreover, Techspace Aero is the leading supplier of oil pumps ([40-50]%/[50-60]% installed base/order backlog) whereas  Parker
   Hannifin is the largest supplier of oil tanks ([50-60]%/[30-40]% installed base/order backlog). Other oil pump players include  UTC  Aerospace
   Systems, Crane and Parker Hannifin, whereas Techspace Aero, Israel Aircraft Industries ("IAI") and Hitchcock  Industries  are  active  in  oil
   tanks. It is further claimed that both oil pumps and oil tanks are rather "low tech" products and are  easily  replicable  and  as  such  GE's
   downstream rivals would always be able to identify alternative suppliers and transfer production.

128. Table 5 shows the Notifying Party's estimates for the worldwide market shares in oil pumps split per the various aircraft size  segments  in
   which Avio is present. The Commission notes that according to Notifying Party, Avio's oil pump market shares based on the order backlog do not
   substantially differ from those based on the installed base.

                       Table 5: Worldwide oil pump market shares – large commercial and regional aircraft – installed base

|                         |GE                |Techspace Aero      |Avio                    |UTC                                 |
|[…]                      |PW1100G           |P&W                 |A320neo family          |Large commercial aircraft, large    |
|                         |                  |                    |                        |regional aircraft (turbofan)        |
|[…]                      |PW1200G           |P&W                 |Mitsubishi Regional Jet |Large commercial aircraft, large    |
|                         |                  |                    |                        |regional aircraft (turbofan)        |
|[…]                      |PW1400G           |P&W                 |Irkut MS-21             |Large commercial aircraft, large    |
|                         |                  |                    |                        |regional aircraft (turbofan)        |
|[…]                      |PW1500G           |P&W                 |Bombardier C-Series     |Large commercial aircraft, large    |
|                         |                  |                    |                        |regional aircraft (turbofan)        |
|[…]                      |PW150             |P&W                 |Bombardier Aerospace    |Small regional aircraft (turboprop) |
|                         |                  |                    |Q400/Dash 8             |                                    |
|[…]                      |TP400-D6          |EPI                 |A400M Atlas military    |Military transport (turboprop)      |
|                         |                  |                    |transport               |                                    |

   Source: Notifying Party

129. As regards civil applications, the Notifying Party submits that it does not have reliable information  regarding  turboprop  and  turboshaft
    fleet numbers and that, as a result, it was only able to provide market share information for turbofan engines. The  Notifying  Party  claims
    that this overstates the Parties' market shares as important turboprop and turboshaft PGB suppliers were omitted  whereas  the  Parties  have
    very limited presence in the turboprop and turboshaft segment. The Notifying Party estimates the market shares for PGBs on  turbofan  engines
    to be the following:

                          Table 9: Worldwide PGB market shares – large commercial and regional aircraft – installed base

|                               |GE                             |Honeywell                      |Avio                           |
|Large Regional Jet             |[0-5]%                         |[90-100]%                      |[0-5]%                         |
|Total                          |[0-5]%                         |[90-100]%                      |[0-5]%                         |

   Source: Notifying Party

                          Table 10: Worldwide PGB market shares – large commercial and regional aircraft – order backlog

|                               |GE                             |P&W                            |Avio                           |
|Narrow-body                    |[0-5]%                         |[70-80]%                       |[20-30]%                       |
|Large Regional Jet             |[0-5]%                         |[90-100]%                      |[0-5]%                         |
|Total                          |[0-5]%                         |[70-80]%                       |[20-30]%                       |

   Source: Notifying Party

130. As regards military applications, Avio is only present in one engine for military transport  aircraft,  the  TP400-D6,  which  has  not  yet
    entered into service. As a result, Avio's share for military transport platforms is [0-5]%.

131. Out of the six engines mentioned in paragraph 139, only one competes directly with a GE JV engine on the same platform:  the  PW1100G  which
    has been selected by Airbus, together with CFMI's LEAP-1A engine, to power the A320neo family. Concerns about the PW1100G were raised  during
    the market investigation and are discussed in greater detail below.

132. For the other five engines mentioned in paragraph 139, the only form of competition with GE-powered engines is  indirect,  that  is  to  say
    aircraft-to-aircraft competition. In this regard, the Notifying Party claims that the merged  entity  would  not  have  the  ability  or  the
    incentive to foreclose.

133. On civil aircraft, it should be noted that Avio acts as […] of PGBs for three engines (PW11200G, PW1400G and  PW1500G),  which  equip  large
    commercial/regional aircraft, and as […] for the PW150, which equips a small regional aircraft. The market investigation has shown that,  for
    large commercial/regional aircraft, there are few suppliers with design capacities (mostly Avio and P&W) but that there  are  more  suppliers
    with build-to-print capacities, (Avio, P&W, BMT Aerospace, Precision Gear, Triumph,  KHI).[107]  For  small  regional  aircraft,  the  market
    investigation suggests that the following companies would  have  both  design  and  build-to-print  capacities:  Avio,  P&W,  GE,  Turbomeca,
    Honeywell, UTC, RR.[108] Therefore, the merged entity would not have the ability to foreclose access to inputs for GE  competitors  regarding
    PGBs in the light of the numerous alternatives that exist in the market.

134. In addition, as demonstrated in the table below, the aircraft powered by the engines for which Avio is a  PGB  supplier  compete  against  a
   number of other aircraft with no GE engine option. The extent to which GE would have the opportunity to divert  customers'  purchases  to  GE-
   powered aircraft is significantly reduced by the wide number of available aircraft platforms that have no GE engine option. In  that  respect,
   it is to be emphasised that the merger will not provide GE with access to information on aircraft buyers'  preferences  or  other  means  that
   could reduce the uncertainty that the foreclosure would benefit sales of aircraft platforms that are not powered by GE.

                                            Table 11: Aircraft-to-aircraft competition regarding PGBs

|Engine                 |Platform                |GE- or GE JV- powered platform           |Other platform powered by an engine |
|                       |                        |                                         |where Avio is not a PGB supplier    |
|PW1200G                |Mitsubishi Regional Jet |Bombardier CRJ (CF34)[109]               |New Embraer E-Jet (PW1700G and      |
|                       |                        |(platform out of production or being     |PW1900G)                            |
|                       |                        |phased out)                              |Sukhoi Superjet (PowerJet SaM146)   |
|                       |                        |Embraer E-Jet (CF34)[110]                |Antonov An-148 (Progress D-136)     |
|                       |                        |(platform out of production or being     |                                    |
|                       |                        |phased out)                              |                                    |
|PW1400G                |Irkut MS-21             |Airbus A320neo (LEAP-1A)                 |A320 family (IAE V2500)             |
|                       |(also powered by another|Boeing 737MAX                            |(platform out of production or being|
|                       |engine)                 |(LEAP-1B)                                |phased out)                         |
|                       |                        |Comac C-919 (LEAP-1C)                    |Irkut MS-21                         |
|                       |                        |A320 family (CFM56)                      |(Aviadvigatel PD-14)                |
|                       |                        |(platform out of production or being     |                                    |
|                       |                        |phased out)                              |                                    |
|                       |                        |737 (CFM56)                              |                                    |
|                       |                        |(platform out of production or being     |                                    |
|                       |                        |phased out)[111]                         |                                    |
|PW1500G                |Bombardier C Series     |Airbus A320neo (LEAP-1A)                 |A320 family (IAE V2500)             |
|                       |                        |Boeing 737MAX                            |(platform out of production or being|
|                       |                        |(LEAP-1B)                                |phased out)                         |
|                       |                        |Comac C-919 (LEAP-1C)                    |Irkut MS-21                         |
|                       |                        |A320 family (CFM56)                      |(Aviadvigatel PD-14)                |
|                       |                        |(platform out of production or being     |                                    |
|                       |                        |phased out)                              |                                    |
|                       |                        |737 (CFM56)                              |                                    |
|                       |                        |(platform out of production or being     |                                    |
|                       |                        |phased out)                              |                                    |
|PW150                  |Bombardier Dash8 Q400   |SAAB 340 (CT-7)                          |ATR 42 (PW100 family)               |
|                       |                        |(platform out of production or being     |ATR 72 (PW100 family)[112]          |
|                       |                        |phased out)                              |Antonov-140 (PW100 family)          |
|                       |                        |                                         |Xi'an MA60 (PW100 family)           |
|                       |                        |                                         |Xi'an MA600 (PW100 family)          |
|                       |                        |                                         |Antonov-140 (Klimov TV3)            |

   Source: Notifying Party

135. The merged entity would therefore have neither the ability nor the incentive to foreclose input on the segment of PGBs for civil aircraft.

136. On the segment of PGBs for military transport aircraft, Avio has a very limited  presence,  as  shown  by  its  market  share  mentioned  in
    paragraph 141 above, and is facing some important current  or  potential  competitors  such  as  Northstar,  Triumph,  Timken,  or  KHI.[113]
    Therefore, the merged entity would not have the ability to foreclose access to inputs for GE competitors regarding PGBs in the light  of  the
    numerous alternatives that exist in the market.

137. In addition, it should be noted that there is a significant difference in military  transport  between  turboprop  and  turbofan  platforms:
    military transports with turboprops are more appropriate for shorter-distance air drops and troop transport, and allow  for  preservation  of
    maximum thrust during manoeuvring while military transports with turbofans are designed for long-distance transport, primarily of  cargo,  at
    high altitudes and consistent speeds. As a consequence the A400M, which is the aircraft powered by the TP400-D6, competes  primarily  against
    another turboprop: the Lockheed Martin C-130J Super Hercules (powered by the RR AE2100D3 engine). Other, smaller turboprop-powered transports
    such as the EADS CASA C-295 (powered by the PW127G turboprop) or CASA/IPTN CN-235 (powered  by  the  GE  CT7  turboprop)  are  not  as  close
    competitors since they have a lower passenger capacity and range. Among the turbofan military transport aircraft, GE is only present  through
    its CF6-80C2 engine, which powers the Kawasaki C-2, and its GE F138, which powers the C-5M Super Galaxy. There are other important  competing
    aircraft such as the Boeing C-17 Globemaster (powered by the PW F117 engine), the in-development Embraer KC-390 (powered by the IAE  V2500  –
    manufactured in part by EPI consortium member MTU) or UAC/HAL Multirole Transport Aircraft (powered by the Aviadvigatel  PS-90A).  Given  the
    availability of several non-GE powered platforms that closely compete against the A400M, the likelihood of diversion of a customer's purchase
    to an aircraft powered with a GE engine is unlikely. GE would have no guarantee that an attempted input foreclosure strategy would result  in
    a successful diversion to the aircraft powered by its engine.

138. The merged entity would therefore have neither the ability nor the incentive to  foreclose  input  on  the  segment  of  PGBs  for  military
    transport aircraft.

139. In view of the above and of the assessment on the PW1100G below, the Commission considers that  the  proposed  transaction  does  not  raise
   serious doubts as to its compatibility with the internal market with respect to the vertical relationship between PGBs and aircraft engines.

5 Accessory Drive Trains ("ADTs")

140. With regard to engine-to-engine competition, Avio supplies ADTs (or their constituent parts) on a number of  engine  programmes  that  power
    aircraft for which a GE or GE JV engine is also offered as an option. In particular, Avio supplies ADTs or their components for the following
    non-GE engines:

                                        Table 12: Avio's involvement on non-GE engines with regard to ADTs

|Avio's involvement        |Engine          |Engine OEM          |Aircraft Platform       |Type of aircraft                    |
|ADT […]                   |PW1100G         |P&W                 |A320neo family          |Large commercial aircraft, large    |
|                          |                |                    |                        |regional aircraft (turbofan)        |
|ADT […]                   |IAE V2500       |P&W (JV)            |A320 family             |Large commercial aircraft, large    |
|                          |                |                    |                        |regional aircraft (turbofan)        |
|ADT […]                   |Trent 900       |RR                  |A380                    |Large commercial aircraft, large    |
|                          |                |                    |                        |regional aircraft (turbofan)        |
|ADT […]                   |PW4000          |P&W                 |A330, Boeing 767 and 777|Large commercial aircraft, large    |
|                          |                |                    |                        |regional aircraft (turbofan)        |

   Source: Notifying Party

141. The Notifying Party submits that it has not been able to gather sufficiently reliable and robust information to permit  the  calculation  of
   individual ADT component shares on a stand-alone basis. Nevertheless, the Notifying Party believes that the shares  for  the  supply  of  ADTs
   largely reflect the shares for the supply of AGBs, the "heart" of the ADT. The Commission will thus focus on the AGB and accept that  the  ADT
   market shares are taken as a proxy for the AGB. The Notifying Party submits that the merged entity will  neither  have  the  ability  nor  the
   incentive to foreclose.

142. In terms of ability, GE considers that (i) all ADT programmes are governed by LTAs  signed  between  Avio  and  engine  manufacturers  which
   contain comprehensive contractual protections against any type of supply disruptions, including price, quality of products and delivery terms,
   and (ii) there are strong, viable competitors to which customers can switch without materially affecting their own  downstream  engine  supply
   obligations (such as Hispano-Suiza/Safran, UTC Aerospace Systems/UTC, KHI, IHI, Triumph  and Northstar Aerospace).

143. In terms of incentive, GE claims that any foreclosure attempts would result in a loss of  sales  and  profits  of  Avio  products,  monetary
   damages resulting from a breach of contract and long-term reputational damage for both Avio and GE. Moreover, given the customers' ability  to
   switch to alternative suppliers in a timely and cost-efficient way, GE considers it unlikely that foreclosure  attempts  would  enable  GE  to
   divert sales away from its engine competitors.

144. The Notifying Party submits that Avio's civil share in large commercial and regional aircraft  is  [20-30]%/[20-30]%  (installed  base/order
   backlog) for ADTs, with Hispano-Suiza being the market leader ([30-40]%/[650-60]%, installed base/order backlog).  With  regard  to  the  sub-
   segments of large commercial and regional aircraft, Avio's share is  highest  for  wide-body  large  commercial  aircraft  ([60-70]%/[40-50]%,
   installed base/order backlog). Hispano-Suiza is second in this segment ([10-20]%/[30-40]%, installed base/order backlog).

                         Table 13: Worldwide ADT market shares – large commercial and regional aircraft – installed base

  |RR |UTC  |Hispano-Suiza |Avio |Northstar |Triumph |KHI |IHI | |Wide-body |[5-10]% |[5-10]% |[10-20]% |[60-70]% |[0-5]% |[0-5]% |[0-5]% |[0-5]%
 | |Narrow-body |[0-5]% |[0-5]% |[50-60]% |[10-20]% |[0-5]% |[10-20]% |[0-5]% |[5-10]% | |All large commercial aircraft |[0-5]% |[0-5]% |[40-50]%
  |[30-40]% |[0-5]% |[10-20]% |[0-5]% |[5-10]% | |Large regional jet |[0-5]% |[0-5]% |[0-5]% |[0-5]% |[0-5]% |[0-5]% |[90-100]% |[0-5]% | |Small
 regional jet |[40-50]% |[0-5]% |[0-5]% |[0-5]% |[40-50]% |[0-5]% |[10-20]% |[0-5]% | |TOTAL |[5-10]% |[0-5]% |[30-40]% |[20-30]% |[5-10]% |[10-
20]% |[5-10]% |[5-10]% | |Source: Notifying Party

                          Table 14: Worldwide ADT market shares – large commercial and regional aircraft – order backlog

  |RR |UTC  |Hispano-Suiza |Avio |Northstar |Triumph |KHI |IHI | |Wide-body  |[0-5]% |[10-20]% |[30-40]% |[40-50]% |[5-10]% |[0-5]% |[0-5]% |[0-
  5]% | |Narrow-body |[0-5]% |[5-10]% |[60-70]% |[10-20]% |[0-5]% |[10-20]% |[0-5]% |[5-10]% | |All large commercial aircraft |[0-5]% |[10-20]%
 |[50-60]% |[20-30]% |[0-5]% |[5-10]% |[0-5]% |[0-5]% | |Large regional jet |[0-5]% |[10-20]% |[0-5]% |[20-30]% |[0-5]% |[0-5]% |[60-70]% |[0-5]%
| |Small regional jet |[0-5]% |[0-5]% |[0-5]% |[0-5]% |[0-5]% |[0-5]% |[0-5]% |[0-5]% | |TOTAL |[0-5]% |[10-20]% |[50-60]% |[20-30]% |[0-5]% |[5-
10]% |[0-5]% |[0-5]% | |Source: Notifying Party

145. Although some concerns were expressed during the market investigation with  regard  to  the  fact  that  the  number  of  available  ADT/AGB
   suppliers on the market will be reduced, the market investigation also confirmed the presence of competitors in both full ADT modules as  well
   as separate ADT components with design and build-to print capabilities. It was confirmed that Hispano-Suiza and  UTC  Aerospace  Systems  have
   full ADT/AGB capabilities for large commercial aircraft and are regarded as credible competitors.[114] For smaller aircraft, KHI  and  Triumph
   are mentioned as credible competitors and RR and P&W also have internal capabilities.[115] Apart from manufacturers with design  capabilities,
   several build-to-print suppliers are active on the market, including KHI and Northstar.[116]

146. Initially, RR and P&W's raised concerns in relation to programmes on which Avio supplies  ADTs  or  ADT  components.  These  programmes  are
   discussed in detail below in sections V.7.6.1 and V.7.6.2.

147. Apart from these said programmes, there were no concerns raised in the market investigation with regard  to  ADTs  or  ADT  components.[117]
    According to Safran "[t]here should be no problem unless GE decides to modify Avio’s current strategy to supply all OEM engine  manufacturers
    (including GE's competitors) on future programmes, which Safran rates as a low probability" and "Safran’s assessment is that continued supply
    will be maintained on existing programmes."[118]

148. In view of the above and of the assessment in section V.7.6.2 below, the Commission considers that the proposed transaction does  not  raise
    serious doubts as to its compatibility with the internal market with respect to the vertical relationship between ADTs and aircraft engines.

6 PW1100G

149. As explained above, Avio is P&W's development partner and key component supplier for the PW1100G, which will equip the A320neo  and  compete
    with the GE JV engine LEAP-1A on this platform. In particular, Avio is responsible for the design and manufacture of  the  ADT  and  the  oil
    tank, as well as for the manufacture of the PGB.

150. The PW1100G is currently under development and has reached a critical stage as it is currently being  tested  and  engine  certification  is
    scheduled in 2014, with a view to entering into service at the end of 2015. In this regard, the PW1100G is […] of the LEAP-1A,  which  should
    be certified […] and enter into service […].

151. According to the estimates based on the data provided by the Notifying Party, approximately [20-30]% of the airlines that  have  ordered  an
    A320neo have chosen the PW1100G whereas [30-40]% have opted for the LEAP-1A and [30-40]% still need to make a decision as regards the  engine
    that will equip their A320neo.[119]

152. During the market investigation, some respondents, including P&W, raised concerns  that  the  merged  entity  would  have  the  ability  and
    incentive to delay the design, testing and certification of the PW1100G because such a disruption could help GE  achieve  additional  LEAP-1A
    sales.[120]

153. It has been argued that the merged entity could slow down the testing, certification, troubleshooting and production process in  many  ways,
    for example by not putting the required levels of resources or by  refraining  from  making  all  the  efforts  possible  to  solve  problems
    diligently.[121] In particular, it has been argued that it would be very difficult to demonstrate that the disruption results from negligence
    or misbehaviour on the part of the merged entity.[122]

154. It has also been argued that merged entity could benefit from implementing disruptive strategies for the following reasons: (i) a  delay  in
    the testing/certification/production of the PW1100G would reduce P&W's first-mover advantage and damage the reputation of  this  new  engine,
    thereby inducing customers to switch to the LEAP-1A, and (ii) given the limited financial value of the respective components supplied by Avio
    compared to that of an engine,[123] there could be an incentive to forego profits resulting from the components sales in  order  to  increase
    engine sales. The risk of GE accessing confidential P&W information has also been raised.[124]

155. The Notifying Party has argued that, contrary to the concerns raised during the market investigation, the merged entity would  neither  have
    the ability nor the incentive to foreclose P&W's access to the PW1100G components supplied by Avio. In particular, the Notifying Party argued
    that such behaviour would be made impossible by the comprehensive contractual provisions present in the long term agreement between  P&W  and
    Avio. This agreement, which covers the life of the PW1100G programme, contains provisions […].

156. The Notifying Party has also emphasized the fact that the merged entity would lack significant influence on the upstream markets,  that  P&W
    is itself responsible for the production of part of the components requirements, and that P&W would be able to find  alternative  sources  of
    supply for the ADT, the oil tank and the PGB.

157. Furthermore, the Notifying Party submitted that the merged entity would have no incentive to foreclose  given  the  contractual  damages  it
    would incur […].

158. The Notifying Party also claims that it would be further deterred from any foreclosure attempts because of (i) the  reputational  damage  it
    would be exposed to, (ii) the loss of revenues incurred on the upstream markets, (iii) the unlikelihood of customers switching  their  engine
    selection, and (iv) GE's inability to capture diverted sales […].

159. The results of the market investigation cast some doubts on some of the arguments put forward by the Notifying Party. In  particular,  if  a
    delay in certification or delivery of the PW1100G engine were to happen, some airlines indicated they may switch to another engine.[125]

160. In addition, given the very tight schedule for the certification process and the time required to switch suppliers, it is doubtful that  P&W
   would be able to replace Avio as supplier responsible for the design and manufacture of the ADT in a timely and effective manner.

161. Furthermore, while market respondents have indicated that the merged entity might indeed suffer reputational  damage  should  it  engage  in
   delaying behaviour, some also indicated that P&W would also suffer reputational damage should its PW1100G engine be delayed.[126]

162. Finally, a preliminary analysis of potential foreclosure incentives based on the sales revenue and margin datasets submitted by the  Parties
   indicates that the present value of the average lifetime gross margin earned  by  GE  on  engine  sales  is  several  times  larger  than  the
   corresponding margin earned by Avio on its component sales. This implies that GE would only need to capture a relatively small  percentage  of
   downstream engine sales to make a foreclosure strategy profitable. This is particularly so during the design phase of the PW1100G,  given  the
   […]. As a consequence, incentives to foreclose cannot be entirely excluded.

163. On 19 June 2013, the Parties entered into a commercial assurances agreement (the "CAA") with P&W regarding the PW1100G and  some  associated
   programmes. The CAA supplements the existing relevant agreements. The key provisions of the CAA are in essence as follows:

          i. [...];

         ii. […];

        iii. […];

         iv. […];

          v. […];

         vi. […];

        vii. […];

       viii. […];

         ix. […];

          x. […].

164. According to Paragraph 31 of the Guidelines on the assessment of non-horizontal mergers, "input foreclosure arises, where, post-merger,  the
    new entity would be likely to restrict access to the product or services that it would have otherwise supplied  absent  the  merger,  thereby
    raising its downstream rivals' costs by making it harder for them to obtain supplies of the input under  similar  prices  and  conditions  as
    absent the merger".[127]

165. Paragraph 32 of the Guidelines provide that "In assessing the likelihood of an anticompetitive input foreclosure  scenario,  the  Commission
    examines, first, whether the merged entity would have, post-merger, the ability to substantially foreclose access to inputs, second,  whether
    it would have the incentive to do so, and third, whether a foreclosure strategy would have a significant detrimental  effect  on  competition
    downstream".

166. As regards the ability of GE to engage into an input foreclosure strategy, the provisions of the CAA (as explained in the paragraphs  above)
    address the concerns raised during the market investigation and will ensure that GE will  not  have  the  ability  to  engage  in  any  input
    foreclosure strategy post-merger for the following reasons.

167. First, [...].[128] […].

168. Second,  […].

169. Third, […].

170. Fourth, […].

171. In light of these considerations, the Commission considers that it is very unlikely that GE would have  the  ability  to  foreclose  P&W  as
   regards its access to inputs for the PW1100G engine.[129] The Commission therefore considers that the  proposed  transaction  does  not  raise
   serious doubts as to its compatibility with the internal market as regards potential foreclosure for the supply of components  by  the  merged
   entity used in the production of the PW1100G engine.

7 Trent 900

172. Avio supplies ADTs (or their constituent parts) for the RR Trent 900 engine, which powers the very large wide-body four-engine Airbus  A380.
    The A380 is a large-size aircraft capable of carrying between 525 and 853 passengers depending on the configuration. In addition to  the  ADT
    parts already mentioned, in the Trent 900, the ADT also contains the SAGB (Step-Aside GearBox).

173. The A380 offers two engines as an option on the aircraft: the RR Trent 900 engine and the Engine  alliance  GP7200  (which  is  a  50-50  JV
    between GE and P&W, see footnote 4).

174. As regards the supply of these products, RR and Avio are parties to a […] (The Trent 900 agreement) […], as well as a  […]  and  a  […].  As
    explained above in paragraph 13, RRSP contracts are long-term, life of programme relationships. Partners provide upfront  investment  to  the
    programme and share in programme risk and revenues. Partners are more  aligned  with  RR's  own  business  model  than  traditional  supplier
    relationships, and have more access to specific details on the engine business case.

1 RR's initial concerns

175. In the course of the market investigation, RR expressed concerns as regards the vertical impact of the  transaction  as  regards  the  Trent
    900.

176. In particular, RR considered that GE would have the ability to conduct input foreclosure on the components of the ADT. First,  as  described
    above in section V.3.7, AGBs/ADTs are a critical system for the engine, despite their comparatively modest value. There is a  high  level  of
    technical integration into the rest of the engine. AGB/ADT failure or disruption would be highly problematic.

177. Second, provided that alternative suppliers are present on the market to replace Avio as  an  ADT  supplier,  RR  considers  that  switching
    supplier mid-programme is extremely challenging. Even given access to Avio's IPR, it would take significant expense to bring another  design-
    make supplier. The lead time would be around a year to develop the new system, and around six to twelve months for qualification  and  engine
    testing. The certification and testing issues would be even more significant with no access to Avio's IPR. Re-design would then  more  likely
    involve more flight testing - alongside the engine testing outlined above. Moreover, RR questioned the possibility  to  support  arrangements
    for re-supply and repair of two separate lines of components in the aftermarket. According to RR, running mixed fleets of  engines  would  be
    highly unattractive for operators (airlines and leasing companies).

178. Third, the existing contracts (LTAs) do not contain adequate protection against disruption by GE. Even if these contracts  include  […],  RR
    considers that they were drafted from a position where Avio and RR had an aligned commercial interest  in  a  successful  programme.  In  the
    situation where Avio is under GE ownership, their provisions are sufficiently unclear to […]. These  particular  clauses  have  a  number  of
    issues from RR's perspective, each of which could lead to legal dispute between the parties and make them very difficult to enforce.

179. RR also considers that GE would have the incentive to disrupt RR’s supply of Trent 900 engines to drive  sales  of  its  competing  engines.
    This is mainly linked to the fact that GE would be able to capture a large proportion of diverted sales owing to its leading position in  the
    wide body segment generally and specifically its position as the only competitor on the Airbus A380.[130]

2 The Notifying Party's position

180. The Notifying Party claims on the contrary that it will have neither the ability nor the incentives to foreclose RR's access to  Avio's  ADT
    components.

181. According to GE, the long term agreements signed between RR and Avio contain adequate protection clauses with regard to quality, prices  and
    delivery guarantees of the ADTs supplied by Avio. As regards particularly the RR Trent 900 engine, the  agreement  includes  provision  which
    constrains the ability of the new entity to increase prices and it also protects against degradations of quality and delivery.  According  to
    GE, production continuity is further guaranteed by strict transition support obligations which ensure that, […]. Nonetheless, as developed by
    RR, it is questionable whether these provisions are in themselves sufficient to ensure a smooth transition to another supplier,  should  this
    be necessary.

182. GE also considers that RR has effective and timely counter-strategies to make foreclosure impossible,  such  as  switching  to  a  potential
    alternative ADT supplier such as Hipano-Suiza, KHI, Triumph or Northstar, with  no  disruption  of  an  engine  programme  thanks  to  Avio's
    continuing supply obligations foreseen by the LTAs. GE however acknowledges that it would take RR between […] months to identify and  develop
    a new source of supply for the disrupted product.[131] GE considers that this transition would be further facilitated by  Avio's  contractual
    obligation to provide […].

183. The Notifying Party put forward that the merged entity would not  have  incentives  to  foreclose  access  to  inputs.  In  particular,  any
    foreclosure strategy would negatively affect GE/Avio's short and long-term's commercial interests at a  number  of  different  levels  by  i)
    exposing the merged firm to significant contractual damages for breach of the contract; ii) exposing GE to lasting  reputational  damage  and
    iii) creating a certain loss of revenues in  upstream  markets.  There  again,  GE's  exposure  to  contractual  damages  is  linked  to  the
    enforceability of the relevant provisions of the LTAs.

184. Finally, the incentives to foreclose access to inputs are, according to GE, limited by the  fact  that  customers  are  unlikely  to  switch
    engine choices even in the event of a temporary supply disruption, making the likelihood of any downstream capture by the merged entity  more
    remote. Customers tend to have an installed base related to a particular engine option on an  aircraft,  giving  them  strong  preference  to
    maintain their original choice to avoid additional costs and additional complexity.

3 Agreement between RR and GE

185. On 30 May 2013, RR and GE reached an agreement[132] ("The Deed of Amendment") on the  specific  amendments  to  be  made  to  the  principal
    relevant agreements between RR and Avio in civil programmes, including the Trent 900 engine.

186. The key provisions of the agreement are as follows:

          i. […].

         ii. […].

        iii. […].

         iv. […].

          v. […].

         vi. […].

        vii. […].

4 Assessment of the potential input foreclosure strategy

187. According to Paragraph 31 of the Guidelines on the assessment of non-horizontal mergers, "input foreclosure arises, where, post-merger,  the
    new entity would be likely to restrict access to the product or services that it would have otherwise supplied  absent  the  merger,  thereby
    raising its downstream rivals' costs by making it harder for them to obtain supplies of the input under  similar  prices  and  conditions  as
    absent the merger".

188. In addition, Paragraph 32 of the Guidelines provide that " In assessing the likelihood of an  anticompetitive  input  foreclosure  scenario,
    the Commission examines, first, whether the merged entity would have, post-merger, the ability to substantially foreclose access  to  inputs,
    second, whether it would have the incentive to do so, and third, whether a foreclosure strategy would have a significant  detrimental  effect
    on competition downstream".

189. As regards the ability of GE to engage into an input foreclosure strategy, the provisions of the Deed of  Amendment  (as  explained  in  the
    paragraphs above) address the concerns expressed by RR during the market investigation and will ensure that GE would not have the ability  to
    engage in any input foreclosure strategy post-merger for the RR Trent 900 engine for the following reasons.

190. First, the provisions as regards […]. The commitment […] will also facilitate the transition process for RR, and minimalize the  risk  of  a
    supply disruption.

191.  Second, […]. The provision ensures that RR has enough time to develop another source of  supply  before  any  potential  supply  disruption
    could occur.

192. Third, the commitment to […] will ensure that GE is unable to harm RR by raising the prices of the products.

193. Fourth, […] mitigate any risk of GE endangering RR's programmes through access to sensitive information.

194. Finally, RR confirmed that […] in its view the provisions of the Deed of Amendment adequately safeguards its position and are sufficient  to
    address any potential input foreclosure concerns.

195. In the light of these considerations, the Commission considers that it is most likely that GE would not have the ability to foreclose RR  as
    regards its access to inputs for the Trent 900 engine. It is therefore concluded, on the basis  of  the  all  available  evidence,  that  the
    notified operation does not raise serious doubts as to its compatibility with the internal market with respect to the Trent 900 engine.

8 Military applications – Eurojet

1 Introduction

196. Avio is a member of the Eurojet Turbo GmbH consortium  (“Eurojet  consortium”),  which  was  formed  for  the  purpose  of  the  design  and
    manufacture of the EJ200 engine that powers the Eurofighter Typhoon military aircraft. The other members of the Eurojet  consortium  are  RR,
    MTU and ITP.

197. Both the aircraft and the engine are products of a collaborative programme between the governments of the  United  Kingdom,  Germany,  Italy
    and Spain. The Eurofighter programme is a multinational collaborative programme to develop and manufacture a multi role combat aircraft.  The
    participation level of the equipment suppliers in the programme is directly linked to the number of aircraft ordered by each country (UK 33%,
    Germany 30%, Italy 19% and Spain 14%). Avio, together with Alenia, represent the Italian participation in the Eurofighter programme.

198. Eurojet supplies the engine to the Eurofighter GmbH consortium (“Eurofighter consortium”) which designs  and  manufactures  the  Eurofighter
    Typhoon military aircraft and integrates the EJ200 into the aircraft system. The members  of  the  Eurofighter  consortium  are  BAE  Systems
    (United Kingdom), EADS Deutschland (Germany), EADS Construcciones Aeronauticas (Spain) and Alenia Aeronautica (Italy).

199. Apart from being a key supplier, Avio's participation in Eurojet reflects Italy's continued commitment to Europe's  most  important  defence
    cooperation programme. Avio has developed and currently manufactures parts of the  EJ200  engine  and  has  a  workshare  of  the  engine  of
    approximately [20-30]%. Avio designs and produces the gearbox, the afterburner and part of the low pressure turbine of the EJ200 engine.

200. In previous cases in the aerospace defence markets, the Commission has concluded  that  there  is  only  a  limited  degree  of  supply-side
    substitutability and no substitutability from the demand side since military subsystems are conceived, designed and manufactured according to
    the very specific requirements of the applications and the military platform they serve.

201. The costs of military engine development, certification and integration into an aircraft platform are very high. Respondents to  the  market
    investigation have unanimously indicated that qualifying another manufacturer for the subsystems that Avio  currently  produces  for  Eurojet
    would be prohibitively expensive, time consuming and endanger the EJ200 programme.

202. It can thus be concluded that each of the subsystems that Avio produces for the  Eurojet,  and  in  particular  each  of  the  gearbox,  the
    afterburner and low pressure turbine, form a market in themselves.

203. For defence markets, a distinction is traditionally made between those countries  where  the  Ministries  of  Defence,  being  the  ultimate
    customers, award contracts to a domestic supplier on the one hand, and those countries without a national supplier on the other hand. In  the
    latter case, existing products rather than tailor made programmes are procured, and prime contractors are usually selected on  the  basis  of
    open international tenders. The relevant geographic market is therefore considered national in scope where there is a national supplier,  and
    otherwise the EEA or worldwide.

204. For the case at hand, the relevant geographic market for  sales  to  NATO  Eurofighter  and  Tornado  Management  Agency  ("NETMA")  Members
    (Germany, UK, Spain and Italy) covers those four Member States as each of those participating countries has participated in  the  development
    costs of the Eurojet / Eurofighter joint programme, has subsequently ordered a number of Eurofighter aircraft and its national suppliers have
    been awarded an equivalent industrial participation in the project. Aircraft deliveries to the four participating governments are ongoing.

205. Both the Eurofighter Typhoon and the Eurojet EJ 200 engine compete in international markets in respectively fighter  aircraft  platform  and
    fighter engine-to-engine competitions.

2 Competitive analysis: Possible competition problems through GE’s ability to undermine the competitive position of Eurojet

1 Introduction

206. MTU, ITP and RR as members of the Eurojet consortium, BAE Systems as part of the Eurofighter consortium, as well  as  the  […]  have  raised
    concerns that post-merger GE would obtain significant influence and access to strategic information of one of its  main  competitors  in  the
    market for selling fighter aircraft in international markets, that is to say outside the four participating Member States.

207. In a concentrated market with only two military engine manufacturers in the EEA and five worldwide, the proposed  transaction  would  enable
    GE to prevent the Eurofighter from offering an alternative to GE-powered platforms and  possibly  would  degrade  the  continued  ability  of
    Eurojet to compete on a level playing field.

208. The Commission has therefore to safeguard that the merger will not negatively affect the market structure, in particular with a view to  the
    export markets, where only a few players are active and investment barriers are significant in terms of know-how and cost. As the ability  of
    Eurojet / Eurofighter to continue competing on a level playing field with GE and GE-powered platforms is  crucial  for  maintaining  European
    capabilities, the Commission has to look carefully not only at the present competitive situation which is mainly focused on sales to the four
    founding Member States, but also at the export markets.

2 Market position

209. The most important competitor to the Eurojet EJ200 in international markets is GE's F414 engine  that  powers  the  Boeing  F/A-18E/F  Super
    Hornet series and the SAAB Gripen. Other competitors include the Dassault Rafale (powered by Snecma), and the GE F100 / F110 that powers  the
    Lockheed Martin F-16 and Boeing F-15. Data on campaigns in which the Eurojet EJ200 / Eurofighter participated show  that  the  aforementioned
    fighter platforms with their respective engines are its main competitors.

210. P&W also supplies engines for the F15 and F16, but appears to be less of an alternative  to  the  Eurojet  and  GE  engines  in  the  export
    markets, as are the Russian Klimov, Saturn and Mikoyan engines that power various types of MiG and  Sukhoi  aircraft.  The  P&W  F135  engine
    powering the Lockheed Martin F-35 JSF Lightning II has significantly different performance specifications compared to the Eurojet  EJ200  and
    GE F404 / F414 engines. The JSF programme is – as explained above - a state of the art platform that replaces  rather  than  substitutes  the
    Eurojet and its competitors.

211. On the basis of the above, it can be concluded  that  the  EJ200  is  in  direct  competition  with  GE  engines  both  in  engine-to-engine
    competitions and through platform competition. Considering in particular performance specifications, the Eurojet EJ200 and  GE  F404  /  F414
    engines are particularly close competitors.

212. Avio is considered by the market as having unique capabilities on each of the gearbox, the afterburner and low pressure turbine  that  could
    not easily be replaced or replicated. In addition to the difficulties to replace suppliers in the  civil  aerospace  segment,  the  […]  have
    pointed to the principle of 'juste retour' whereby […] companies are reserved a workshare  on  the  Eurojet  equal  to  that  Member  State's
    contribution. Therefore, even if a European alternative manufacturer such as Safran could replace Avio to some  extent,  this  would  not  be
    possible within the context of Eurojet.

3 Ability to foreclose

      NETMA sales

213. With regard to the security and performance of supply of the  participating  Member  States  (NETMA),  both  Eurojet/Eurofighter  consortium
    members and […] have raised concerns about the security of supply for aircraft currently being produced.  In  addition,  concerns  have  been
    raised that Avio would become a partner that is less willing to actively improve the capabilities of the EJ200  or  respond  to  a  call  for
    updates and improvements.

214. Since the competition for powering the Eurofighter aircraft sold to the four NETMA participating Member States has run  its  course,  it  is
    not a given that GE would have the incentive to reduce, delay or frustrate Avio supplies for NETMA Eurofighter  aircraft.  The  Parties  have
    noted that GE has nothing to gain from such foreclosure, but  would  suffer  from  lost  aftermarket  sales  and  the  repercussions  of  the
    reputational damage that such foreclosure would trigger. The Parties have also submitted that GE would not  have  the  ability  to  foreclose
    Eurojet from continued input as there are contractual safeguards and the national MoD would readily detect and remedy any such foreclosure.

215. Respondents to the Commission's request for information do not consider that the MoDs'  monopsonist  countervailing  buyer  power  would  be
    sufficient to avoid GE foreclosing or degrading Avio's input. […] (Decreto Legge N. 21/2012). […]  therefore  consider  that  further  supply
    assurances should be in line with what the Italian MoD required under national law. […] also indicated that in the  absence  of  accompanying
    commitments, the commitments provided under the Italian golden law  could  have  an  adverse  effect  for  […]  that  cannot  replicate  such
    commitments from Avio in terms of security and conditions of supply.

216. In particular with regard to technological improvements, both the consortium members […] consider that  supply  assurances  will  be  needed
    with regard to the merged entity continuing to invest in product updates, required modifications and continuous improvements, also  when  the
    Eurojet engine comes to the end of its lifetime.

      Export sales

217. Currently, Eurojet's sales to the four NETMA member states account for the vast majority of  Eurojet  revenues.  Up  to  the  present  date,
    Eurofighter Typhoons have been sold outside the four NETMA member states to Austria, Saudi Arabia and Oman. However, in each of  these  cases
    no other fighter airframers were invited to tender.

218. Non-NETMA sales ("Export Sales") will in the future increasingly be the focus of Eurojet and the  continued  competitiveness  of  the  EJ200
    engine in the export markets is essential for the consortium to maintain and develop its critical capabilities. In fact, export sales of  the
    Eurofighter are considered by the market as vital to amortising the programme's supply and support costs.

219. The Parties have argued that there is very little opportunity for foreclosure even in the export  markets  because  such  foreclosure  would
    lead to a certain loss of Avio revenues and an uncertain win of a GE-powered platform since there are numerous non-GE-powered options in  the
    export markets. That uncertainty would be further increased  by  geo-political  military  procurement  considerations  that  could  decide  a
    competition irrespective of performance or financial considerations. The risk of reputational damage that such foreclosure would trigger, the
    strong buyer power of both airframe manufacturers and military customers, and compulsory requirements for Avio to continue its commercial and
    supply relationships in favour of Eurojet, further reduce the incentive for GE to foreclose  post-merger.  With  regard  to  the  ability  to
    foreclose, the Parties have stated that the long lead times and comprehensive contractual protections (including post-termination  transition
    support from Avio) would allow Eurojet to transition supply to an alternative supplier without disruption, thus eliminating GE's  ability  to
    foreclose.

220. The Parties arguments have not been supported by the Eurojet consortium and the […]. The market  investigation  has  indicated  that,  since
    there is no possibility to replace Avio with an equally capable supplier as explained above,  GE  would  have  the  ability  to  degrade  the
    competitiveness of the Eurofighter since Avio has veto rights […]. GE through Avio could influence export campaigns by refusing to  agree  on
    commercial elements that are essential to maintain existing export contracts and to win new contracts. Moreover, it could delay agreement  on
    offset obligations, transfer of IP, commercial concessions, required technical adaptations […].  Any  of  these  actions  would  degrade  the
    competitiveness of Eurojet. Whilst such actions of foreclosure are difficult to detect and prove, the repercussions on the  competiveness  of
    Eurojet would be considerable, in particular in view of the market being lumpy, demand being very occasional and requiring protracted  multi-
    level negotiations which facilitates foreclosing behaviour and the strategic use of information.

      Engine-to-engine competition in export sales

221. Given that engine performance is a significant discriminator in military aircraft  competitions,  GE  could  delay  acting  on  requests  of
    customers to adapt its subsystems to specific performance requests. That would be most relevant for competitions between aircraft engines  to
    be mounted on new or adapted aircraft platforms. As emerging markets are moving to designing their own fighter  platforms,  competitions  for
    the stand-alone engines are increasing. A decision from GE to prioritise other development programmes or to strategically act on  information
    regarding engine performance requirements from international customers would not be necessarily easy to detect and to remedy.

222. The Parties have stated that engine-to-engine competition will take place exclusively on future platforms, as  all  current  Eurojet-powered
    fighters are sole-sourced. As only future platforms could be affected, the long lead times between aircraft order  and  delivery  would  give
    Eurojet sufficient time to transition supply. However, supply foreclosure is not the only concern. The  market  investigation  has  indicated
    that, quite apart from whether the non-affected Eurojet members would be able to transition supply  to  an  alternative  supplier,  Eurojet's
    competitive position would be significantly hampered by Avio being able to oppose participating in  the  call  for  proposals,  delaying  the
    formulation of the bid and/or refusing to make  concessions  in  terms  of  price,  off-take  obligations,  investments,  required  technical
    adaptations or IPR transfer. As illustrated by the current ongoing campaigns for […], the consortium needs to act  quickly  in  sophisticated
    and multi-faceted negotiations and Avio would be able to delay and distract these negotiations in favour of GE.

223. Respondents to the Commission's requests for information[133]  have  stressed  that  in  such  sophisticated  negotiations,  the  access  to
    sensitive information or ability to hamper the flexibility of the consortium to react quickly to  changing  customer  demands  can  decide  a
    competition. Furthermore, in such a lumpy market, the unexpected loss of an important  competition  can  have  significant  consequences  for
    continued capability.

224. In addition, the existing Eurojet contractual framework provides little protection against Avio's unwillingness to co-operate. The  "Eurojet
    Collaboration Agreement" foresees that[134], in the event members would be unwilling to participate,  the  other  Parties  "[…]."  Also[135],
    "[…]" and "[…]." This implies that for each competition and modification GE through Avio would be able to block  or  stall  negotiations  and
    have access to strategic information.

225. The Agreement further stipulates[136] that "[…]". Quite apart from whether the  other  consortium  member  would  be  able  to  take  Avio's
    workshare, GE could significantly delay and even block Eurojet from competing in the process of negotiating the required licenses from Avio.

226. Since the engine price for the Eurofighter Typhoon (including support and maintenance activities for an average 30 years or more  lifecycle)
    accounts for a significant proportion of the total aircraft system price, and Avio's contribution  in  terms  of  value  is  considerable,  a
    potential price increase for Avio's contribution would not necessarily need to be very significant to have a material effect on the price  of
    the Eurojet engine and thus on the Eurofighter itself.

227. GE's access to the information flow is in itself a major concern.  As  part  of  the  Eurojet  consortium,  GE  would  obtain  through  Avio
    confidential information about Eurofighter Typhoon export bids and leakage of such information to its own engine operations or to its  engine
    customers such as Boeing and Saab would deteriorate the competitive position of Eurojet and the Eurofighter consortium.  Market  participants
    have indicated that the current information restriction would be inadequate to compensate for such leakage and that firewalls  are  difficult
    to implement as long as Avio seconded personnel  would  be  directly  involved  in  these  international  competitions.  The  concerns  about
    information leakage also apply to the technology applied for the Eurojet engine, which  could  be  used  by  GE  in  the  F414  or  successor
    programmes.

4 Incentive to foreclose

228. As to the incentive for GE to foreclose, it is noted that GE has […]% ownership of  its  F404/414  engine  programme  and  the  revenues  it
    generates compared to only […]% of potentially foregone sales on Eurojet. In aircraft-to-aircraft competitions, GE would be  incentivised  to
    ensure that the GE powered F-18E or Gripen won, so obtaining […]% of the engine supply rather than a smaller percentage via the Avio interest
    in the Eurojet consortium. Although it is correct that the existence of competing fighter aircraft with similar mission  profiles  would  not
    give GE absolute certainty of being able to induce a customer to switch to a GE-powered fighter aircraft and capture downstream  sales  after
    foreclosure of the EJ200 / Eurofighter Typhoon, the rewards of such foreclosure would be very  considerable  and  the  foreclosure  could  be
    targeted for certain competitions on the basis of GE's access to strategic information.

229. The Parties have stressed that GE has made a commitment to the Italian Government that it will continue to  supply  the  Eurojet  consortium
    and the Italian Airforce. Members of the Eurojet consortium as well as […] have taken the common position that any commitments  that  GE  has
    made to the Italian Government would not limit the competition risks and may even result in further adverse effects for the other  MoDs  that
    cannot replicate such commitments from Avio in terms of security and  conditions  of  supply.  Existing  contractual  protection,  the  MoDs'
    countervailing power, reputational issues and potential  retaliation  of  consortium  members  are  considered  insufficient  by  the  market
    participants to rule out such an obvious and significant conflict of interest that would arise as a result of the proposed transaction.

5 Effect on competition

230. The Parties further stress that the […][137] It follows that since it was already possible for Avio to collaborate  with  GE  on  a  fighter
    engine […], the merger would have no effect on competition.

231. More specifically, the Parties have pointed to Snecma and RR  having  formed  a  partnership  with  regards  to  military  and  afterburning
    applications, and RR having started collaborations with both P&W and GE on potential fighter applications. Also, the Parties have pointed  to
    MTU being involved in the F414 engine programme on a RRSP basis well before […] and the fact that its current programme share  comprises  the
    manufacture and supply of sophisticated components/parts such as the  high  pressure  compressor  drum,  complex  blisks  as  well  as  other
    components, comprising […]% of the F414 programme's value.

232. The Commission has examined each of these examples. Whereas RR's involvement with either Snecma or P&W will not lead to concrete results  in
    the foreseeable future, MTU is indeed participating on a direct competitor to Eurojet. However, MTU acts as a component supplier with no  say
    or knowledge in US or export programmes, nor does its participation in the F414 programme provide it  with  any  access  to  information.  In
    addition, MTU's collaboration does not lead to similar concerns in terms  of  being  able  to  exercise  veto  rights  and  access  sensitive
    information through seconded personnel. Overall, the market investigation has confirmed that such collaboration on a project – by  –  project
    basis is very much different from GE acquiring a consortium member.

233. The Commission considers that post-merger GE would obtain significant influence and access to the strategic information of one of  its  main
    competitors in the market for selling fighter aircraft. It follows that the proposed transaction  is  likely  to  allow  GE  to  prevent  the
    Eurofighter from offering an alternative to GE-powered platforms and to degrade the continued ability of Eurojet to compete.

3 Conclusion

234. The Commission considers that the proposed transaction as originally  notified  raises  serious  doubts  in  the  markets  where  Eurojet  /
    Eurofighter is active, both with regard to NETMA sales and sales in the export markets. Indeed, as set out above, Avio’s veto and information
    rights will most likely enable GE not only to prevent Eurojet and Eurofighter from competing in markets outside the four NETMA  nations,  but
    also to weaken the competitive position of Eurojet in the NETMA markets.

    PROPOSED REMEDIES

235. In order to render the concentration compatible with the internal market, GE has modified the notified concentration by  entering  into  the
    following commitments, which are annexed to this decision and form an integral part thereof. The submission of these commitments on  18  June
    2013 extended the legal deadline for the Commission's decision to 2 July 2013. On 26 June 2013 GE submitted a modified version of its initial
    commitments.

1 Description of the Proposed Commitments

236. The content of the final set of commitments submitted by GE can be summarised as follows, whereby each of the following sets a condition  to
    be fully complied with:

    a) […] involvement of Avio in Eurojet entities

237. GE commits that Avio will […].

    b) […] decisional influence

238. GE commits that Avio will […].

239. In addition, a fast track dispute resolution and arbitration process is put in place.

    c) […] Eurojet Shareholders Board with an Advisory Committee

240. In case the other Eurojet Shareholders […].

    d) Restricting access to confidential information, limitations on secondment and employment of Avio employees by GE

241. GE commits that the Avio representatives on the Eurojet Shareholders Board and the Eurojet General Meeting […].

242. […].

    e) […] cooperation in Non-NETMA Sales and supply assurances for NETMA sales

243. GE commits to […].

2 Assessment of the Proposed Commitments

244. Under the Merger Regulation, the Commission has the power to accept commitments that are  deemed  capable  of  rendering  the  concentration
    compatible with the internal market so that they will prevent a significant impediment of effective competition. As indicated in point  9  of
    the Commission notice on remedies acceptable under Council Regulation (EC) No 139/2004 and under Commission Regulation (EC) No 802/2004 ("the
    Remedies Notice")[138] the commitments have to eliminate the competition concerns entirely and have to be comprehensive  and  effective  from
    all points of view.

245. In the present case, the commitments offered by the Parties are considered to address all the  concerns  identified  regarding  the  Eurojet
    project and the EJ 200 engine.

    a) […] decisional influence […]

246. The Commission’s main concerns with regard to the transaction are linked to  Avio’s  existing  decisional  power  (through  veto  rights  or
    other), which might constitute an effective legal tool to prevent Eurojet from competing with GE, to the detriment of Eurojet.

247. The present proposal to limit Avio's decision-making powers other than to protect the economic value of its minority investment  in  Eurojet
    removes that concern.

248. The fact that Avio […].

249. The commitment […] provides additional certainty that the commitment is of a structural nature that is fully in line  with  phase  I  remedy
    requirements.

250. The fast track dispute resolution and arbitration process provides a practical solution for potential interpretation conflicts, without  the
    Commission having to decide on the issue again.

251. Respondents to the market test of the proposed commitment, […], have confirmed that the remedy removes  GE-Avio's  decisional  influence  on
    future export competitions. At the same time, the remedy respects Italy's significant contribution to the Eurofighter programme […].

    b) […] Avio personnel involved in Eurojet entities […]

252. The fact that GE accepts […] provides safeguards that GE will not have access to sensitive information […]  or  have  decisional  influence.
    That commitment results in […]. This commitment also facilitates […].

253. Respondents to the market test […], consider that the remedy […] structurally  cuts  the  information  flows  to  GE.  […].  Therefore,  the
    safeguards that are in place were considered to be sufficient to exclude the risk of information being passed on to GE.

    c) Information access

254. The commitment to […] addresses the risk that might arise from the fact that GE could obtain confidential information on  potential  bidding
    opportunities and the strategic plans of Eurojet and use this information to hamper Eurojet’s competitiveness. The information […]. It cannot
    be expected that GE will receive any information through these limitations that might be directly related to export  opportunities  and  that
    might enable GE to affect Eurojet's competitiveness.

255. The limitations […] ensure that also in the more distant future GE will not be  able  to  have  access  to  information  that  could  hamper
    Eurojet’s competitiveness.

256. Respondents to the market test, […], consider that the remedy structurally cuts the information flows to GE and that  it  should  remain  in
    place for the lifetime of the Eurofighter platform.

    d) […] cooperation in Non-NETMA Sales and supply assurances for NETMA sales

257. The commitment that Avio will […], provides the additional certainty […] that the acquisition of Avio  by  GE  will  not  negatively  affect
    Eurojet both for existing contracts and future competitions.

258. […]

3 Conclusion on the Proposed Commitments

259. […] the Commission notes that the […] consortium members of both Eurojet and Eurofighter consider the remedy to be necessary to  ensure  the
    continued competitiveness of Eurojet, without endangering Italy's significant contribution to the Eurofighter programme.

260. Altogether, the Commission considers that the remedies provide an effective and sufficiently clear-cut solution  to  remove  all  identified
    competition problems on all potentially affected markets. The Commission is therefore of the opinion that, as far as the Eurojet project  and
    the EJ 200 engine is concerned, the commitments as submitted by the Notifying Party on 26 June 2013 remove the Commission’s serious doubts as
    to the compatibility of the transaction with the internal market and the EEA Agreement.

261. Under the first sentence of the second subparagraph of Article 6(2) of the Merger Regulation, the Commission  may  attach  to  its  decision
    conditions and obligations intended to ensure that the undertakings concerned comply with the commitments they have  entered  into  vis-à-vis
    the Commission with a view to rendering the concentration compatible with the common market.

262. The fulfilment of the measure that gives rise to the structural change of the market is a condition, whereas the  implementing  steps  which
    are necessary to achieve this result are generally obligations on the parties. Where a condition is not fulfilled, the Commission’s  decision
    declaring the concentration compatible with the common market no longer stands. Where the  undertakings  concerned  commit  a  breach  of  an
    obligation, the Commission may revoke the clearance decision in accordance with the Merger Regulation. The undertakings concerned may also be
    subject to fines and periodic penalty payments under Articles 14(2) and 15(1) of the Merger Regulation.

263. In accordance with the basic distinction between conditions and obligations described above, the decision in this  case  is  conditioned  on
    the full compliance with the requirements set out in Section B of the commitments submitted by the Notifying Party  on  26  June  2013  which
    constitute conditions, whereas the other sections of the commitments constitute obligations on the Notifying Party.

264. The full text of the commitments is annexed to this decision and forms an integral part thereof.

    CONCLUSION

265. For the above reasons, the Commission has decided not to oppose the proposed transaction as modified by the commitments and  to  declare  it
    compatible with the internal market and with the functioning of the EEA Agreement, subject to full compliance with the conditions in  section
    B of the commitments annexed to the present decision and with the obligations contained in the other sections of the said  commitments.  This
    decision is adopted in application of Article 6(1)(b) in conjunction with Article 6(2) of the Merger Regulation.

For the Commission
(signed)
Joaquín ALMUNIA
Vice-President

                                                          Case No. COMP/M.6844 – GE/Avio

                                                      COMMITMENTS TO THE EUROPEAN COMMISSION

                                                                   26 JUNE 2013

Pursuant to Article 6(2) of Council Regulation (EC) No. 139/2004 as  amended  (the  "Merger  Regulation"),  General  Electric  Company  ("GE"  or
"Notifying Party") hereby provides the following Commitments (the "Commitments") in order to enable the European  Commission  (the  "Commission")
to declare the concentration notified in Case No COMP/M.6844 compatible with the internal market and the EEA Agreement by its  decision  pursuant
to Article 6(1)(b) of the Merger Regulation (the "Decision").

These Commitments are given by the Notifying Party following discussions with the Commission to address doubts or concerns  that  the  Commission
may have regarding the compatibility of the proposed transaction with the common market.   These commitments do  not  constitute  a  decision  or
admission by the Notifying Party that these commitments are necessary to avoid the  proposed  transaction  being  incompatible  with  the  common
market or a substantial part thereof, and are without  prejudice  to  GE's  views  and  position  regarding  the  proposed  transaction  and  its
compatibility with the common market.

These Commitments shall take effect upon the date of adoption of the Decision, but will be subject to the closing of GE's acquisition of Avio.

This text shall be interpreted in the light of the Decision to the extent that the Commitments are attached as  conditions  and  obligations,  of
the general framework of EU law, in particular in the light of the Merger Regulation, and by reference  to  the  Commission  Notice  on  remedies
acceptable under Council Regulation (EC) No. 139/2004 and under Commission Regulation (EC) No. 802/2004.

Definitions

      For the purpose of the Commitments, the terms defined below shall have the following meaning:

      Arbitral Tribunal: has the meaning given in paragraph 46.

      Avio: the present Aviation Business of Avio S.p.A., to  be  formed  after  the  proposed  transaction  as  GE  AVIO  S.R.L.,  a  società  a
      responsabilità limitata organized and incorporated under the laws of Italy, registered with the Register of  Enterprises  in  Torino  under
      number 10898340012, whose registered office is at Via I Maggio, 99, 10040, Rivalta Di Torino, Torino, Italy.

      Closing: the completion of the Sale and Purchase Agreement of 21 December 2012.

      […].

      Decision: the European Commission's Decision in Case No COMP/M.6844 – GE/Avio, declaring the concentration between GE and  Avio  compatible
      with the common market pursuant to Article 6(2) of the Merger Regulation.

      Effective Date: the date of adoption of the Decision.

      […].

      […].

      […].

      […].

      […].

      […].

      […].

      […].

      […].

      […].

      GE: General Electric Company, a public company, incorporated under New York Law.

      ICC: has the meaning given in paragraph 44.

      Indemnified Party: has the meaning given in paragraph 36.

      […].

      Monitoring Trustee: a person appointed in accordance with Section C.

      […].

      […].

      […].

      […].

      […].

      […].

      A.    Purpose

   1. The European Commission is concerned that GE's control over Avio will negatively affect the competitiveness of the EuroJet Engine  Program,
      by disrupting EuroJet sales campaigns outside of Germany, Italy, Spain and  the  UK  and  by  giving  GE  access  to  confidential  EuroJet
      information.

   2. Pursuant to the Commitments in Section B below, GE offers additional assurances to EuroJet, guaranteeing that Avio  will  comply  with  its
      obligations under the EuroJet Agreement.

   3. GE therefore makes the following Commitments to address the Commission's concerns.

      B.    Commitments

B.1   Commitment Relating to Avio's Rights And Presence in EuroJet

   4. […].

        a) […].

   5. […].

   6. […].

   7. […].

   8. […].

   9. […].

      B.2   Commitment Relating to […] Non-NETMA Sales

        a) […].

  10. […].

  11. […].

  12. […].

B.3   Supply Assurances / Firewalls

  13. […].

      B.3.1       Supply Assurances

  14. […].

      B.3.2       Firewalls

  15. […].

C.    Monitoring Trustee

   Appointment Procedure

  16. GE shall appoint a Monitoring Trustee to carry out the functions specified in this Section C.  The Monitoring Trustee shall be  independent
      of GE and Avio, possess the necessary qualifications to carry out its mandate, and shall neither have nor become exposed to a  conflict  of
      interest.  The Monitoring Trustee shall be remunerated by GE in a way that does not impede the independent and effective fulfilment of  its
      mandate.

   Proposal by GE

  17. No later than two weeks after the Effective Date, GE shall submit a list of one or  more  persons  whom  GE  proposes  to  appoint  as  the
      Monitoring Trustee to the Commission for approval.  The proposal shall contain sufficient information for the Commission to verify that the
      proposed Monitoring Trustee fulfils the requirements set out in paragraph 25 and shall include:

        a) the full terms of the proposed mandate, which shall include all provisions necessary to enable the Monitoring Trustee to  fulfil  its
           duties under these Commitments;

        b) the outline of a work plan which describes how the Monitoring Trustee intends to carry out its assigned tasks.

   Approval or rejection by the Commission

  18. The Commission shall have the discretion to approve or reject the proposed Monitoring  Trustee(s)  and  to  approve  the  proposed  mandate
      subject to any modifications it deems necessary for the Monitoring Trustee to fulfil its obligations.  If only one  name  is  approved,  GE
      shall appoint or cause to be appointed, the individual or institution concerned as Monitoring  Trustee,  in  accordance  with  the  mandate
      approved by the Commission.  If more than one name is approved, GE shall be free to choose the Monitoring  Trustee  to  be  appointed  from
      among the names approved.  The Monitoring Trustee shall be appointed within one week of the Commission's approval, in accordance  with  the
      mandate approved by the Commission.

   New proposal by GE

  19. If all the proposed Monitoring Trustees are rejected, GE shall submit the names of at least two more candidates within two weeks  of  being
      informed of the rejection, in accordance with the requirements and the procedure set out in paragraphs 26 and 27.

   Monitoring Trustee nominated by the Commission

  20. If all further proposed Monitoring Trustees are rejected by the Commission, the Commission shall nominate a  Monitoring  Trustee,  whom  GE
      shall appoint, or cause to be appointed, in accordance with a trustee mandate approved by the Commission.

   Functions of the Monitoring Trustee

  21. The Monitoring Trustee shall act on behalf of the Commission to ensure GE's compliance with the Commitments.  The Commission  may,  on  its
      own initiative or at the request of the Monitoring Trustee or GE, give any orders or instructions to the Monitoring  Trustee  in  order  to
      ensure compliance with the conditions and obligations.  GE is not entitled to give instructions to the Monitoring Trustee.  The  Monitoring
      Trustee will act on behalf of the Commission as a trusted expert in the fast track dispute settlement procedure described in Section D.

  22. The Monitoring Trustee shall propose to GE such measures as the Monitoring Trustee considers necessary to ensure GE's compliance  with  the
      Commitments, and the Monitoring Trustee shall propose necessary measures to the Commission in the event that GE does not  comply  with  the
      Monitoring Trustee's proposals within the timeframe set by the Monitoring Trustee.

   Mandate of the Monitoring Trustee

  23. The Monitoring Trustee shall:

        a) broker a resolution of any dispute that arises between a third party and GE regarding compliance with these Commitments;

        b) advise and, if need be, make written recommendations to the Commission when any dispute  between  a  third  party  and  GE  regarding
           compliance with these Commitments is brought before the Arbitral Tribunal referred to in paragraph 46;

        c) provide to the Commission, sending GE a non-confidential copy at the same time, a report bi-annually during the first year  that  the
           Commitments are in effect and annually every year during the rest of the term of the Commitments as indicated in Section B, regarding
           the status and outcome of any dispute between a third party and GE in which the Monitoring Trustee has participated;

        d) propose to GE such measures as the Monitoring Trustee considers necessary to ensure compliance with these Commitments;

        e) supervise the implementation of compliance with the firewall arrangements;

        f) promptly report in writing to the Commission, sending GE a non-confidential copy at the same time,  if  it  concludes  on  reasonable
           grounds that GE is failing to comply with these Commitments.

  24. The Monitoring Trustee shall provide a detailed work plan to the Commission within one month of its appointment, sending a copy  to  GE  at
      the same time, describing how it intends to carry out its mandate.

  25. […].

   Duties and obligations of GE in relation to the Monitoring Trustee

  26. GE shall provide and shall cause its advisors to provide the Monitoring Trustee with all  such  cooperation,  assistance  and  information,
      including copies of all relevant documents and access to relevant staff, as the Monitoring Trustee may reasonably require  to  perform  its
      tasks in relation to these Commitments.

  27. GE shall indemnify the Monitoring Trustee and its employees and agents (each an  "Indemnified  Party")  and  hold  each  Indemnified  Party
      harmless against, and hereby agrees that an Indemnified Party shall have no liability  to  GE  for  any  liabilities  arising  out  of  the
      performance of its duties under the Commitments, except to the extent that such liabilities result from the wilful  default,  recklessness,
      gross negligence or bad faith of the Monitoring Trustee, its employees, agents or advisors.

  28. At the expense of GE, the Monitoring Trustee may appoint advisors (in particular for technical or legal advice), subject to  GE's  approval
      (this approval not to be unreasonably withheld or delayed) if the Monitoring Trustee considers the appointment of such  advisors  necessary
      or appropriate for the performance of its duties and obligations under the mandate, provided that any fees and other expenses  incurred  by
      the Monitoring Trustee are reasonable.  Should GE refuse to approve the advisors proposed by the Monitoring Trustee,  the  Commission  may,
      after having heard GE, approve the appointment of such  advisors  instead.   Only  the  Monitoring  Trustee  shall  be  entitled  to  issue
      instructions to the advisors.  Paragraph 36 shall apply to the advisors mutatis mutandis.

   Replacement, discharge and re-appointment of the Monitoring Trustee

  29. If the Monitoring Trustee ceases to perform its functions under the Commitments or for any other good cause, including its  exposure  to  a
      conflict of interest:

        a) the Commission may, after hearing the Monitoring Trustee, require GE to replace the Monitoring Trustee; or

        b) GE, with the prior approval of the Commission, may replace the Monitoring Trustee.

  30. If the Monitoring Trustee is removed according to paragraph 38, the Monitoring Trustee may be required to continue in its function until  a
      new Monitoring Trustee is in place to whom the Monitoring Trustee has effected a full hand-over  of  all  relevant  information.   The  new
      Monitoring Trustee shall be appointed in accordance with the procedure referred to in this Section C.

  31. Besides the removal according to paragraph 38, the Monitoring Trustee shall cease to act as Monitoring Trustee only  after  the  Commission
      has discharged it from its duties after all the Commitments with which the Monitoring Trustee has been entrusted have lapsed.

      D.    Fast-Track Dispute Resolution

  32. In the event that a third party, showing a sufficient legitimate interest, claims that GE is failing to comply with its obligations arising
      from the Commitments set out in Section B above, such third party may invoke the dispute settlement procedure described in this Section  D.
      The arbitration process described in this Section D shall be used only to resolve disputes regarding compliance with the Commitments.

  33. The third party who seeks to initiate the procedure shall notify GE and the Monitoring Trustee of its request and specify the  reasons  why
      it believes that GE is failing to comply with the Commitments.  GE shall use its best efforts to resolve all differences of opinion and  to
      settle all disputes of which it has been notified through co-operation and consultation within a reasonable period of time not to exceed 15
      (fifteen) working days after receipt of the request.

  34. The Monitoring Trustee shall present its own proposal to the Commission, GE and the relevant third party, for resolving the dispute  within
      eight working days, specifying in writing the action, if any, to be taken by GE in order to ensure compliance with the  Commitments  vis-à-
      vis the third party, and be prepared, if requested, to facilitate the settlement of the dispute.

  35. Should GE and the third party fail to resolve their differences of opinion, the third party may serve a notice ("the Notice"), in the sense
      of a request for arbitration, to the International Chamber of Commerce ("ICC"), with a copy of such Notice and request for  arbitration  to
      the Monitoring Trustee.  The Notice shall set out in detail the dispute, difference or claim (the "Dispute") and shall contain, inter alia,
      all issues of both fact and law, including any suggestions as to the procedure, and all documents  relied  upon  shall  be  attached,  e.g.
      documents, agreements, expert reports and witnesses statements.

  36. GE shall, within 10 working days from receipt of the Notice, submit its answer (the "Answer"), which shall provide detailed reasons for its
      conduct and set out, inter alia, all issues of both fact and law, including any suggestions to the  procedure,  and  all  documents  relied
      upon, e.g. documents, agreements, expert reports  and  witnesses  statements.   The  Answer  shall,  if  appropriate,  contain  a  detailed
      description of the action, which GE proposes to undertake vis-à-vis the third party.

  37. The third party shall nominate its arbitrator in the Notice; GE shall nominate its arbitrator in the Answer.  The arbitrators nominated  by
      the third party and by GE shall, within five working days of the nomination of the latter, nominate the chairman,  making  such  nomination
      known to the parties to the arbitration and the ICC, which shall forthwith confirm the  appointment  of  all  three  arbitrators  (together
      referred to as the "Arbitral Tribunal").  Should GE fail to nominate an arbitrator, or  if  the  two  arbitrators  fail  to  agree  on  the
      chairman, the default appointment(s) shall be made by the ICC.

  38. The Dispute shall be finally resolved by arbitration under the ICC Rules of Arbitration, with such modifications or adaptations as foreseen
      herein or necessary under the circumstances (the "Rules").  The arbitration shall be conducted in London, England, in the English language.

  39. The procedure shall be a fast-track procedure.  For this purpose, the Arbitral Tribunal shall shorten all applicable procedural time-limits
      under the Rules as far as admissible and appropriate in the circumstances.  The parties to the arbitration shall consent to the use  of  e-
      mail for the exchange of documents.

  40. The Arbitral Tribunal shall, as soon as practical after the confirmation of the Arbitral Tribunal, hold  an  organizational  conference  to
      discuss any procedural issues with the parties to the arbitration.  Terms of Reference shall be drawn up and signed by the parties  to  the
      arbitration and the Arbitral Tribunal at the organizational meeting  or  immediately  thereafter  and  a  procedural  time-table  shall  be
      established by the Arbitral Tribunal.  An oral hearing shall, as a rule, be established within three  weeks  of  the  confirmation  of  the
      Arbitral Tribunal.

  41. In order to enable the Arbitral Tribunal to reach a decision, it shall be entitled to request any relevant information from GE or the third
      party, to appoint experts and to examine them at the hearing, and to establish the facts by all appropriate means.  The  Arbitral  Tribunal
      is also entitled to ask for assistance by the Monitoring Trustee in all stages of the procedure.

  42. The arbitrators shall agree in writing to keep any confidential information and business secrets disclosed  to  them  in  confidence.   The
      Arbitral Tribunal may take the measures  necessary  for  protecting  confidential  information  in  particular  by  restricting  access  to
      confidential information to the Arbitral Tribunal, the Monitoring Trustee and outside counsel and experts of the opposing party.

  43. The burden of proof in any dispute governed under the Rules shall be borne as follows:

        a) the party who has requested the arbitration must produce evidence of a prima facie case;

        b) if that party does so, the Arbitral Tribunal must find in favour of the requesting  party  unless  the  Relevant  Party  can  produce
           evidence to the contrary.

  44. The Commission shall be allowed and enabled to participate in all stages of the procedure by:

        a) receiving all written submissions (including documents and reports, etc.) made by the parties to the arbitration;

        b) receiving all orders, interim and final awards and other documents exchanged by  the  Arbitral  Tribunal  with  the  parties  to  the
           arbitration (including Terms of Reference and procedural time-table);

        c) filing any Commission amicus curiae briefs; and

        d) being present at the hearing(s) and being allowed to ask questions to parties, witnesses and experts.

  45. The Arbitral Tribunal shall forward, or shall order the parties to the arbitration to forward, the documents mentioned  to  the  Commission
      without delay.

  46. In the event of disagreement between the parties to the arbitration regarding the interpretation of the Commitments, the Arbitral  Tribunal
      shall inform the Commission and may seek the Commission's interpretation of the Commitments before finding in favour of any  party  to  the
      arbitration and shall be bound by the interpretation.

  47. The Arbitral Tribunal shall decide the Dispute on the basis of the Commitments and the Decision.  The Commitments  shall  be  construed  in
      accordance with the Merger Regulation, EU law and general principles of law common to the legal orders  of  the  Member  States  without  a
      requirement to apply a particular national system.  The Arbitral Tribunal shall take all decisions by majority vote.

  48. Upon request of the third party, the Arbitral Tribunal may make a preliminary ruling on the  Dispute.   The  preliminary  ruling  shall  be
      rendered within one month after the confirmation of the Arbitral Tribunal, shall be applicable immediately and, as a rule, remain in  force
      until a final decision is rendered.

  49. The Arbitral Tribunal shall, in the preliminary ruling as well as in the final award, specify the action, if any, to  be  taken  by  GE  in
      order to comply with the Commitments vis-à-vis the third party.  The final award  shall  be  final  and  binding  on  the  parties  to  the
      arbitration and shall resolve the Dispute and determine any and all claims, motions or requests submitted to the  Arbitral  Tribunal.   The
      arbitral award shall also determine the reimbursement of the costs of the successful party and the allocation of the arbitration costs.  In
      case of granting a preliminary ruling or if otherwise appropriate, the Arbitral Tribunal shall specify that terms and conditions determined
      in the final award apply retroactively.

  50. The final award shall, as a rule, be rendered within six (6) months after the confirmation of the Arbitral Tribunal.  The time-frame shall,
      in any case, be extended by the time the Commission takes to submit an interpretation of the Commitments if asked by the Arbitral Tribunal.

  51. The parties to the arbitration shall prepare a non-confidential version of the final award, without business secrets.  The  Commission  may
      publish the non-confidential version of the award.

  52. Nothing in the above-described arbitration procedure shall affect the powers of the  Commission  to  take  decisions  in  relation  to  the
      Commitments in accordance with its powers under the Merger Regulation and the Treaty on the Functioning of the European Union.

      E.    General Provisions

  53. If the approval of the proposed transaction by another governmental  authority  is  made  subject  to  requirements  that  are  potentially
      inconsistent with these Commitments, GE may request a review and adjustment of these Commitments in order to avoid such inconsistencies.

  54. The Commitments in Sections C and D shall remain in place until the expiry or termination of every Commitment in Section B.

      F.    Review

  55. The Commission may, where appropriate, in response to a request from GE showing good cause and accompanied by a report from the  Monitoring
      Trustee, waive, modify or substitute, in exceptional circumstances, one or more of the undertakings in these Commitments.

duly authorised for and on behalf of

GE

      ……………………………………

      Date:

-----------------------
[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]   Publication in the Official Journal of the European Union No C 143, 23.5.2013, p. 6.

[3]   A GE (50%) and Snecma (SAFRAN) (50%) joint venture, producing a series of engines including the CFM56-5B/7B  (A320,  Boeing  737)  and  the
      LEAP-1A/B/C (A320neo, Boeing 737MAX and COMAC C919).

[4]   A GE (50%)/P&W (50%) joint venture producing the GP7200 (Airbus A380).

[5]   MTU Aero Engines ("MTU") (28%), RR (28%), Snecma (28%) and ITP (16%) together produce the TP-400D (A400M).

[6]   RR (33%), MTU (33%), Avio (21%) and ITP (13%) together produce the EJ200 (Eurofighter Typhoon).

[7]   A joint venture between P&W (49.5%), IHI/KHI (25.25%) and MTU (25.25%) for the production of the V2500 (A320). Originally, P&W and RR  each
      had a 33% share of IAE. However, RR sold its 33% stake back to the group on 29 June 2012. RR continues to have a vendor relationship on the
      V2500, albeit without an ownership interest.

[8]   RR (40%), Avio (20%) and MTU (40%) together produced the RB 199 (Panavia Tornado – now out of production).

[9]   Both Parties are active in the machined parts and fabrications markets (see  M.4561  –  GE/Smiths).  There  is  no  overlap  between  their
      activities if each type of machined part or fabrication is considered separately (apart from the combustion chambers  and  turbine  exhaust
      cases which will be addressed in detail in the present decision at section V.6, and the afterburner nozzles and flaps  where  the  combined
      market share of the Parties would be below 15%). On the overall markets for machined parts and for fabrications, the combined market  share
      of the Parties would be below 15% and they would be facing a large number of competitors including GKN, MTU, and  IHI  (see  reply  to  the
      Commission's request for information pursuant to Article 11 of the Merger Regulation addressed to the Notifying Party, dated 27 May  2013).
      Both Parties are also active in thermal barrier coatings, which are used to enhance durability  and  heat  resistance  of  aircraft  engine
      components or airframe structural components, but the Notifying Party estimates the Parties' shares to be [0-5]%.  As  a  consequence,  the
      effects of the proposed transaction on the markets for machined parts, fabrications and thermal barrier  coatings  will  not  be  discussed
      further in the present decision.

[10]  M.2892 – Goodrich/TRW Aeronauticals Systems Group, M.2220 – General Electric/Honeywell and M.1493 – United Technologies/Sundstrand.

[11]  Replies to question 14 of the Commission's request for information pursuant to Article  11  of  the  Merger  Regulation  addressed  to  LPT
      customers (Q9), dated 14 May 2013.

[12]  Reply to question 15 of the Commission's request for information pursuant  to  Article  11  of  the  Merger  Regulation  addressed  to  LPT
      customers (Q9), dated 14 May 2013.

[13]  Replies to question 10 of the Commission's request for information pursuant to Article  11  of  the  Merger  Regulation  addressed  to  LPT
      competitors (Q10), dated 14 May 2013.

[14]  M.4561 – GE/Smiths, paragraph 29.

[15]  According to the Notifying Party, annular CCs are suitable for engines with axial-flow compressors and low airflow rates.  The  flame  tube
      and both secondary air ducts are annular. Annular CCs are open at the front to the compressor and at the rear to the turbine and relatively
      short. They are mainly used in gas turbine engines.

[16]  According to the Notifying Party, can-type CCs are particularly suitable for engines with centrifugal-flow compressors as  the  airflow  is
      already divided by the compressor outlet diffusors. Each flame tube has its own secondary air duct.   The  separate  flame  tubes  are  all
      interconnected. The entire combustion section consists of 8 to 12 cans that are arranged around the engine. Individual cans are  also  used
      CCs for small engines or auxiliary power units

[17]  According to the Notifying Party, can-annular CCs are a combination of can-type and annular CC. All flame tubes  have  a  common  secondary
      air duct. The aerodynamic properties can be inferior to those of an annular CC  as  the  connectors  between  the  individual  flame  tubes
      adversely affect the ignition behaviour. Can-annular CCs are suitable for large engine and – for mechanical reasons – for engines with high
      pressure ratios. There are some notable differences between CCs for turboshafts and CCs for turbofans. With respect to the former,  the  CC
      is a single (double) annular (directly flow). On the other hand, turboshafts can have reverse flow or annular CCs and lower temperature.

[18]  Replies to question 17 of the Commission's request for information pursuant to  Article  11  of  the  Merger  Regulation  addressed  to  CC
      customers (Q3), dated 14 May 2013, and replies to questions 17 of the Commission's request for information pursuant to Article  11  of  the
      Merger Regulation addressed to CC competitors (Q4), dated 14 May 2013.

[19]  Replies to question 15 of the Commission's request for information pursuant to  Article  11  of  the  Merger  Regulation  addressed  to  CC
      customers (Q3), dated 14 May 2013, and replies to question 15 of the Commission's request for information pursuant to  Article  11  of  the
      Merger Regulation addressed to CC competitors (Q4), dated 14 May 2013.

[20]  Replies to question 12 of the Commission's request for information pursuant to  Article  11  of  the  Merger  Regulation  addressed  to  CC
      customers (Q3), dated 14 May 2013.

[21]  Replies to question 13 of the Commission's request for information pursuant to  Article  11  of  the  Merger  Regulation  addressed  to  CC
      competitors (Q4), dated 14 May 2013.

[22]  M.6581– GKN/Volvo Aero, para. 26.

[23]  Replies to questions 11 and 12 of the Commission's request for information pursuant to Article 11 of the  Merger  Regulation  addressed  to
      TEC competitors (Q10), dated 14 May 2013.

[24]  Although this is rather the case for oil pumps and fairly rare for oil tanks.

[25]  Replies to question 13 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed  to  ADT,  oil
      pumps and oil tanks customers (Q1), dated 14 May 2013, and replies to question 20 of the Commission’s request for information  pursuant  to
      Article 11 of the Merger Regulation addressed to ADT, oil pumps and oil tanks competitors (Q2), dated 14 May 2013.

[26]  Replies to questions 14-15 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation  addressed  to  ADT,
      oil pumps and oil tanks customers (Q1), dated 14 May 2013, and replies to question 21 of the Commission’s request for information  pursuant
      to Article 11 of the Merger Regulation addressed to ADT, oil pumps and oil tanks competitors (Q2), dated 14 May 2013.

[27]  Replies to question 23 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed  to  ADT,  oil
      pumps and oil tanks competitors (Q2), dated 14 May 2013, and replies to question 16 of the Commission’s request for information pursuant to
      Article 11 of the Merger Regulation addressed to ADT, oil pumps and oil tanks customers (Q1), dated 14 May 2013.

[28]  Replies to question 17 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed  to  ADT,  oil
      pumps and oil tanks customers (Q1), dated 14 May 2013.

[29]  Replies to question 24 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed  to  ADT,  oil
      pumps and oil tanks competitors (Q2), dated 14 May 2013.

[30]  Replies to question 17 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed  to  ADT,  oil
      pumps and oil tanks customers (Q1), dated 14 May 2013.

[31]  Replies to question 7 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation  addressed  to  ADT,  oil
      pumps and oil tanks customers (Q1), dated 14 May 2013.

[32]  Replies to question 25 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed  to  ADT,  oil
      pumps and oil tanks competitors (Q2), dated 14 May 2013.

[33]  M.6410 - UTC/Goodrich, M.6554 – EADS/STA/Elbe Flugzeugwerke JV, M.5440 – Lufthansa/Austrian Airlines, M.3374 – SR  Technics/FLS  Aerospace,
      and M.3280 – Air France/KLM.

[34]  M.6554 – EADS/STA/Elbe Flugzeugwerke JV, M.3280 - Air France/KLM and JV.19 - KLM/Alitalia. An A-check is performed approximately every  800
      flight hours and requires around 200-300 man-hours to complete. B-checks are performed approximately  every  4-6  months  and  are  usually
      performed within 3 days at an airport hangar. C-checks are performed approximately every 18 to 24 months or  after  a  specific  amount  of
      actual flight hours as defined by the manufacturer. D-checks/structural checks are the most comprehensive and demanding checks,  since  the
      entire aircraft structure is taken apart for inspection and overhaul. Intermediate structural  checks  occur  after  5-6  years  and  heavy
      structural checks occur after 10-12 years. Such checks will usually demand around 15,000 to 20,000 man-hours and around 1 month to complete
      at suitably equipped maintenance bases.

[35]  M.6410 - UTC/Goodrich.

[36]  Reply to questions 5 and 6 of the Commission’s request for information pursuant to Article 11 of the Merger  Regulation  addressed  to  MRO
      customers (Q11), dated 14 May 2013, and reply to questions 7 and 8 of the Commission’s request for information pursuant to  Article  11  of
      the Merger Regulation addressed to MRO competitors (Q12), dated 14 May 2013.

[37]  Reply to question 7 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to MRO  customers
      (Q11), dated 14 May 2013, and reply to question 11 of the Commission’s request for  information  pursuant  to  Article  11  of  the  Merger
      Regulation addressed to MRO competitors (Q12), dated 14 May 2013.

[38]  Aero-derivative gas turbine engines are derived from existing aircraft engines for use in non-aviation applications,  such  as  marine  and
      industrial power generation applications. Aero-derivatives tend to be lighter-weight variations of an established aircraft engine model.

[39]  Reply to questions 9 and 10 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation  addressed  to  MRO
      customers (Q11), dated 14 May 2013, and reply to question 10 of the Commission’s request for information pursuant  to  Article  11  of  the
      Merger Regulation addressed to MRO competitors (Q12), dated 14 May 2013.

[40]  Capacity of 70-96 passengers.

[41]  Capacity of 100-145 passengers.

[42]  Capacity of 130-230 passengers.

[43]  Capacity of 124-220 passengers.

[44]  Replies to question 8 of the Commission's request for information pursuant to  Article  11  of  the  Merger  Regulation  addressed  to  PGB
      competitors (Q8), dated 14 May 2013, and replies to question 12 of the Commission's request for information pursuant to Article 11  of  the
      Merger Regulation addressed to PGB customers (Q7), dated 14 May 2013.

[45]  Replies to questions 9 to 11 of the Commission's request for information pursuant to Article 11 of the Merger Regulation addressed  to  PGB
      competitors (Q8), dated 14 May 2013, and replies to questions 13 to 15 of the Commission's request for information pursuant to  Article  11
      of the Merger Regulation addressed to PGB customers (Q7), dated 14 May 2013.

[46]  Although sometimes the design of the IGB can be carried out separately.

[47]  Replies to question 6 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation  addressed  to  ADT,  oil
      pumps and oil tanks customers (Q1), dated 14 May 2013 and replies to question 13 of the Commission’s request for  information  pursuant  to
      Article 11 of the Merger Regulation addressed to ADT, oil pumps and oil tanks competitors (Q2), dated 14 May 2013.

[48]  Replies to question 7 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation  addressed  to  ADT,  oil
      pumps and oil tanks customers (Q1), dated 14 May 2013 and replies to question 14 of the Commission’s request for  information  pursuant  to
      Article 11 of the Merger Regulation addressed to ADT, oil pumps and oil tanks competitors (Q2), dated 14 May 2013.

[49]  Replies to question 9 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation  addressed  to  ADT,  oil
      pumps and oil tanks customers (Q1), dated 14 May 2013.

[50]  Replies to question 16 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed  to  ADT,  oil
      pumps and oil tanks competitors (Q2), dated 14 May 2013.

[51]  Replies to question 10 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed  to  ADT,  oil
      pumps and oil tanks customers (Q1), dated 14 May 2013 and replies to question 17 of the Commission’s request for  information  pursuant  to
      Article 11 of the Merger Regulation addressed to ADT, oil pumps and oil tanks competitors (Q2), dated 14 May 2013.

[52]  Replies to question 4 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation  addressed  to  ADT,  oil
      pumps and oil tanks competitors (Q2), dated 14 May 2013.

[53]  Replies to question 15 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed  to  ADT,  oil
      pumps and oil tanks competitors (Q2), dated 14 May 2013.

[54]  Replies to question 8 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation  addressed  to  ADT,  oil
      pumps and oil tanks customers (Q1), dated 14 May 2013.

[55]  See for example M.4561 – GE/Smiths at paras. 23 and 32, M.2738 – GE/Unison at para. 12, M.2220 – GE/Honeywell at paras.  240  and  336  and
      M.697 – Lockheed Martin/Loral Corporation at para. 17.

[56]  M.6554 – EADS/STA/Elbe Flugzeugwerke JV and M.3374 – SR Technics/FLS Aerospace,

[57]  M.6554 – EADS/STA/Elbe Flugzeugwerke JV.

[58]  In other cases, such as PGB, the limited number of replies to the market investigation did not provide  any  reason  to  deviate  from  the
      Commission's previous practice.

[59]  Replies to question 18 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed  to  ADT,  oil
      pumps and oil tanks customers (Q1), dated 14 May 2013, and replies to questions 26-28 of the Commission’s request for information  pursuant
      to Article 11 of the Merger Regulation addressed to ADT, oil pumps and oil tanks competitors (Q2), dated 14 May 2013. Replies  to  question
      18 of the Commission's request for information pursuant to Article 11 of the Merger Regulation addressed to CC customers (Q3), dated 14 May
      2013, and replies to questions 18 and 19 of the Commission's request for information pursuant  to  Article  11  of  the  Merger  Regulation
      addressed to CC competitors (Q4), dated 14 May 2013. Replies to question 14 of the Commission's request for information pursuant to Article
      11 of the Merger Regulation addressed to TEC competitors (Q6), dated 14 May 2013. Replies to  questions  12  and  13  of  the  Commission's
      request for information pursuant to Article 11 of the Merger Regulation addressed to PGB competitors (Q8), dated 14 May 2013,  and  replies
      to question 16 of the Commission's request for information pursuant to Article 11 of the Merger Regulation addressed to PGB customers (Q7),
      dated 14 May 2013. Replies to questions 13, 14 and 17 of the Commission's request for information pursuant to  Article  11  of  the  Merger
      Regulation addressed to LPT competitors (Q10), dated 14 May 2013.

[60]  Reply to question 11 of the Commission’s request for information pursuant  to  Article  11  of  the  Merger  Regulation  addressed  to  MRO
      customers (Q11), dated 14 May 2013 and reply to question 12 of the Commission’s request for information  pursuant  to  Article  11  of  the
      Merger Regulation addressed to MRO competitors (Q12), dated 14 May 2013.

[61]  M.2220 – GE/Honeywell and M.4561 – GE/Smiths.

[62]  M.6410 - UTC/Goodrich, para 52.

[63]        Form CO, para. 137.

[64]  Replies to question 3 of the Commission's request for information pursuant to Article 11 of the Merger Regulation addressed  to  airframers
      (Q13), dated 14 May 2013.

[65]  Replies to question 3 of the Commission's request for information pursuant to Article 11 of the Merger Regulation addressed  to  airframers
      (Q13), dated 14 May 2013.

[66]  GE manufactures CCs for other type of aircraft but they are only used internally. There is also  a  limited  overlap  concerning  auxiliary
      power units ("APU") since Avio provides CC components for […] (which equips only regional airliners and business jets) and GE supplies  the
      CC for […]). This overlap is limited since the APUs are not intended for the same aircraft and compete with […].

[67]  This figure takes into account the fact that GE supplies maximum […]% of the CC requirements for Turbomeca and  that  as  consequence,  the
      Notifying Party estimates its market share to only amount to […]% of […]%.

[68]  Reply […] to question 36 of the Commission's request for information pursuant to Article 11  of  the  Merger  Regulation  addressed  to  CC
      customers (Q3), dated 14 May 2013.

[69]  Capacity 4-8 passengers.

[70]  Capacity of typically 8-12 passengers.

[71]  With respect to military aircraft,[…].

[72]  The LM2500 is one of GE's aero-derivative engines and is derived from the CF6-6 aircraft engine which is no longer in service.

[73]  Avio has not performed any services on the LM2500+ in 2012, nor on the LM2500+G4 since the engine  is  too  new  for  MRO  services  to  be
      needed.

[74]  A similar argument can be applied for aircraft-to-aircraft  competition  where  all  the  engines  across  competing  aircrafts  are  under
      development (engines for the A320neo vs. engines for the Boeing 737MAX) – see paragraph 71 for more details on the relevance of aircraft-to-
      aircraft competition when the related engines are under development. In the current case, the only relevant potential foreclosure  scenario
      affecting aircraft-to-aircraft competition is related to the ADT component under development for the A320neo aircraft (to be  discussed  in
      section concerning the PW1100G).

[75]        The GE90, GEnx, GE CF6-80E1 and CF6-80C2 (wide-body large commercial aircraft engines) and the CFM56-5B and  -7B,  LEAP-1A,  -1B  and
      -1C (narrow-body large commercial aircraft engines).

[76]        The CT7 and the T700 are two GE helicopter engines which, when configured for turboprop, also power fixed wing aircraft such  as  the
      Casa CN-235 (CT7-9C).

[77]  The Notifying Party does not have reliable share information for Avio's LPT competitors in the business aircraft,  helicopter  or  military
      segments. Both Avio and GE have very marginal presences in the business aircraft and helicopter segments (with Avio supplying one  business
      class engine and two helicopter engines, while GE manufactures one business class engine and two  helicopter  engines).  Nevertheless,  the
      Notifying Party understands that the same suppliers present in the LPT large commercial  and  regional  segment  also  serve  the  business
      aircraft and helicopter segments. As regards military applications, the Notifying Party does not have reliable share information for Avio's
      LPT competitors as this information is not publicly available or available from third-party  market  research  sources.  Nevertheless,  the
      Notifying Party understands that the same suppliers present in the LPT civil segment also serve the military segment.

[78]  GE also manufactures LPTs but only for internal use.

[79]  According to the Notifying Party, the protections agreed in LTAs would include: (i) […]; and (ii) […]. The LTAs would cover 100% of  Avio's
      supply of LPTs […].

[80]  The Notifying Party submitted that alternative suppliers include manufacturers such as ITP, MTU, IHI, Snecma, GKN Volvo Aero. In  addition,
      all of the major engine OEMs would be vertically integrated and able to design and manufacture LPT components.

[81]  According to the Notifying Party, even in the case of a complete, long-term disruption of access to Avio's LPTs, GE's rivals  would  always
      be able to identify alternative suppliers, transfer production and return to engine production  and  delivery  before  customers  could  be
      diverted to a different, downstream GE or GE JV engine.

[82]  Replies to questions 31, 32 and 34 of the Commission's request for information pursuant to Article 11 of the  Merger  Regulation  addressed
      to LPT customers (Q9), dated 14 May 2013.

[83]  Replies to question 21 of the Commission's request for information pursuant to Article  11  of  the  Merger  Regulation  addressed  to  LPT
      customers (Q9), dated 14 May 2013, and replies to questions 15, 19 and 20 of the Commission's request for information pursuant  to  Article
      11 of the Merger Regulation addressed to LPT competitors (Q10), dated 14 May 2013.

[84]  Replies to questions 19 and 20 of the Commission's request for information pursuant to Article 11 of the  Merger  Regulation  addressed  to
      LPT customers (Q9), dated 14 May 2013, and replies to questions 19 and 20 of the Commission's request for information pursuant  to  Article
      11 of the Merger Regulation addressed to LPT competitors (Q10), dated 14 May 2013.

[85]  […] reply to question 30 of the Commission's request for information pursuant to Article 11 of  the  Merger  Regulation  addressed  to  LPT
      customers (Q9), dated 14 May 2013.

[86]  Reply to question 30 of the Commission's request for information pursuant  to  Article  11  of  the  Merger  Regulation  addressed  to  LPT
      competitors (Q10), dated 14 May 2013.

[87]  Part of the PT6 CC requirements are also manufactured by P&W – see […] reply to question 7.3 of the Commission's  request  for  information
      pursuant to Article 11 of the Merger Regulation addressed to CC customers (Q3), dated 14 May 2013.

[88]  The Notifying Party submits that the Parties have limited presence and do not have extensive market  information.  It  considers  that  the
      market shares for medium class business jets and large class business jets can be estimated to be [0-5]% and [10-20]%.

[89]  Replies to questions 6, 7.3, 26 and 27 of the Commission's request for  information  pursuant  to  Article  11  of  the  Merger  Regulation
      addressed to CC customers (Q3), dated 14 May 2013, and replies to questions 29 and 30 of the Commission's request for information  pursuant
      to Article 11 of the Merger Regulation addressed to CC competitors (Q4), dated 14 May 2013.

[90]  […] reply to question 27 of the Commission's request for information pursuant to Article 11  of  the  Merger  Regulation  addressed  to  CC
      customers (Q3), dated 14 May 2013.

[91]  It would require time and some investments but not necessarily a recertification. See replies to questions 29, 29.1, 29.2  and  32  of  the
      Commission's request for information pursuant to Article 11 of the Merger Regulation addressed to CC customers (Q3), dated 14 May 2013.

[92]  17 for the PW100 according to PWC's website.

[93]  Over 100 according to PWC's website.

[94]  The Garrett AiResearch TPE-331 engines are produced by Honeywell.

[95]  Replies to question 40 of the Commission's request for information pursuant to  Article  11  of  the  Merger  Regulation  addressed  to  CC
      competitors (Q4), dated 14 May 2013.

[96]  […] reply to question 20 of the Commission's request for information pursuant to Article 11 of  the  Merger  Regulation  addressed  to  TEC
      customers (Q5), dated 14 May 2013.

[97]  […] reply to question 7 of the Commission's request for information pursuant to Article 11  of  the  Merger  Regulation  addressed  to  TEC
      customers (Q5), dated 14 May 2013.

[98]  […] reply to question 4 of the Commission's request for  information  pursuant  to  Article  11  of  the  Merger  Regulation  addressed  to
      airframers (Q13), dated 14 May 2013.

[99]  According to the Notifying Party, oil tanks form part of a wider market of aerospace fabrications. As set out in footnote  9,  the  effects
      of the proposed transaction on the markets for machined parts, fabrications and thermal barrier coatings are not be  discussed  further  in
      the present decision. In any case, Avio's share in the upstream fabrications market would be [0-5]%.

[100]       For instance, for the […] the supply of an entire oil pump is entirely subcontracted to […].

[101]       The Notifying Party believes that the provided oil pump market shares reflect the positions  of  dry  sump  oil  pump  producers.  In
      addition, the Notifying Party submits that the shares  for  oil  pumps  as  a  whole  reflect  the  gerotor  and  vane  pumps  sub-segments
      respectively.

[102]       Oil pumps: IHI, Parker Hannifin, (Techspace Aero) SAFRAN,  Triumph,  UTC  (P&W)  and  ZF  Luftfahrttechnik  GmbH.  Oil  tanks:  Kerns
      Manufacturing, Parker-Hannifin, (Techspace Aero) SAFRAN, Triumph and UTC (P&W). See replies to question 4 of the Commission’s  request  for
      information pursuant to Article 11 of the Merger Regulation addressed to ADT, oil pumps and oil tanks competitors (Q2), dated 14 May  2013.
      See RR's reply to question 49 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to ADT,
      oil pumps and oil tanks customers (Q1), dated 14 May 2013: "Rolls-Royce is not reliant on Avio for access to oil pumps  and  oil  tanks  on
      future programmes."

[103]       See […]'s reply to question 25 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation  addressed
      to ADT, oil pumps and oil tanks customers (Q1), dated 14 May 2013.

[104]       Replies to question 32 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to  ADT,
      oil pumps and oil tanks customers (Q1), dated 14 May 2013. RR switched supplier both on  oil  pumps  and  oil  tanks.  Another  example  on
      switching was provided by the competitor Parker Hannifin: "Years ago, Parker took over OEM production of the lube pumps  for  GE's  Land  &
      Marine engine product line." See Parker-Hannifin's reply to question 43 of the Commission’s request for information pursuant to Article  11
      of the Merger Regulation addressed to ADT, oil tanks and oil pumps competitors (Q2), dated 14 May 2013.

[105]       According to the Notifying Party, […].

[106]       For helicopter PGBs (that is to say for turboshaft), Avio only has limited presence as […].

[107]       Replies to questions 18 and 19 of the Commission's request for information pursuant to Article 11 of the Merger Regulation  addressed
      to PGB competitors (Q8), dated 14 May 2013.

[108]       Replies to questions 18 and 19 of the Commission's request for information pursuant to Article 11 of the Merger Regulation  addressed
      to PGB competitors (Q8), dated 14 May 2013, and replies to question 18 of the Commission's request for information pursuant to  Article  11
      of the Merger Regulation addressed to PGB customers (Q7), dated 14 May 2013.

[109]       This has been confirmed by the market investigation – see […] reply to question 4.1  of  the  Commission's  request  for  information
      pursuant to Article 11 of the Merger Regulation addressed to Airframers (Q13), dated 14 May 2013.

[110]       This has been confirmed by the market investigation – see […] reply to question 4.1  of  the  Commission's  request  for  information
      pursuant to Article 11 of the Merger Regulation addressed to Airframers (Q13), dated 14 May 2013.

[111]       This has been confirmed by the market investigation – see […] reply to question 4.1  of  the  Commission's  request  for  information
      pursuant to Article 11 of the Merger Regulation addressed to Airframers (Q13), dated 14 May 2013.

[112]       In its reply to question 4.1 of the Commission's request for information pursuant to Article 11 of the  Merger  Regulation  addressed
      to Airframers (Q13), dated 14 May 2013, […] only lists the ATR 72 as a competing aircraft for the Dash8 Q400.

[113]       Replies to questions 5, 18 and 19 of the Commission's request for information  pursuant  to  Article  11  of  the  Merger  Regulation
      addressed to PGB competitors (Q8), dated 14 May 2013.

[114]       Replies to questions 4-5 of the Commission’s request for information pursuant to Article 11 of the  Merger  Regulation  addressed  to
      ADT, oil pumps and oil tanks competitors (Q2), dated 14 May 2013. "Both Hispano-Suiza and UTAS  are  credible  suppliers,  with  sufficient
      track record and design expertise to work on future programmes." See […] reply to question 51 of the Commission’s request  for  information
      pursuant to Article 11 of the Merger Regulation addressed to ADT, oil pumps and oil tanks customers (Q1), dated 14 May 2013.

[115]       Replies to question 20 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed to  ADT,
      oil pumps and oil tanks customers (Q1), dated 14 May 2013.

[116]       Replies to question 7 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation addressed  to  ADT,
      oil pumps and oil tanks customers (Q1), dated 14 May 2013.

[117]       Although there were some comments pointing to possible customer foreclosure ("if [GE]  acquires  Avio,  will  look  less  to  outside
      suppliers, and more to Avio, which will reduce competition to win GE's business", see […] reply to question 48 of the Commission’s  request
      for information pursuant to Article 11 of the Merger Regulation addressed to ADT, oil pumps and oil tanks competitors (Q2),  dated  14  May
      2013), the Commission notes that Avio is already GE's most important supplier on its main programmes.

[118]       […] reply to questions 51-52 of the Commission’s request for information pursuant to Article 11 of the  Merger  Regulation  addressed
      to ADT, oil pumps and oil tanks competitors (Q2), dated 14 May 2013.

[119]       This dataset was submitted on the 11 June 2013 as Annex 1 to the response to the Commission’s request  for  information  pursuant  to
      Article 11 of the Merger Regulation addressed to the Notifying Party, dated 5 June 2013.

[120]       See […] reply to question 21.3 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation  addressed
      to Airframers (Q13), dated 14 May 2013. See also […]´s reply to question 34.1 of the  Commission's  request  for  information  pursuant  to
      Article 11 of the Merger Regulation addressed to PGB competitors (Q8), dated 14 May 2013.

[121]       See […] reply to question 21.3 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation  addressed
      to Airframers (Q13), dated 14 May 2013. See also replies to question 23 of the Commission's request for information pursuant to Article  11
      of the Merger Regulation addressed to Airlines (Q14), dated 14 May 2013.

[122]       See […] reply to question 22.2 of the Commission’s request for information pursuant to Article 11 of the Merger Regulation  addressed
      to Airframers (Q13), dated 14 May 2013.

[123]       According to the Notifying Party, the ADT represents less than 5% of the value of an engine, the oil tank less than 1%  and  the  PGB
      less than 5%).

[124]       See […]' reply to question 21.3 of the Commission’s request  for  information  pursuant  to  Article  11  of  the  Merger  Regulation
      addressed to Airframers (Q13), dated 14 May 2013.

[125]       Replies to question 24.5 of the Commission's request for information pursuant to Article 11 of the  Merger  Regulation  addressed  to
      Airlines (Q14), dated 14 May 2013.

[126]       Replies to question 24.2 of the Commission's request for information pursuant to Article 11 of the  Merger  Regulation  addressed  to
      Airlines (Q14), dated 14 May 2013, and replies to question 22.2 of the Commission’s request for information pursuant to Article 11  of  the
      Merger Regulation addressed to Airframers (Q13), dated 14 May 2013.

[127]       Guidelines on the  assessment  of  non-horizontal  mergers  under  Council  Regulation  on  the  control  of  concentrations  between
      undertakings, OJ C 265, 18.10.2008, p. 6.

[128]       Although the Commission considers in light of certain provisions of the CAA that the merged entity would  not  have  the  ability  to
      foreclose P&W, were this not to be the case, it notes that […] would also militate against any potential incentives of GE to foreclose P&W.

[129]       This conclusion applies not only to the engine-to-engine competition concerns raised above but also more broadly,  to  any  potential
      strategy aiming at diverting sales from the A320neo to a competing aircraft, such as the Boeing 737-MAX powered by the LEAP-1B.

[130]       RR put forward that the A380 competes (amongst others) with the Boeing 747-8 on which GE has engine exclusivity.

[131] Form CO, para. 365.

[132]       The agreement was subsequently signed by RR on 13 June 2013 and GE on 14 June 2013.

[133]       Joint presentation by Rolls-Royce, MTU and ITP to the Commission dated 22 May 2013.

[134]       Section 4.4.1 of the Eurojet Collaboration Agreement.

[135]       Section 4.4.3 of the Eurojet Collaboration Agreement.

[136]       Section 4.4.2 of the Eurojet Collaboration Agreement.

[137]       Collaboration Agreement, clause 5.4.

[138]       OJ C 267, 22.10.2008, p. 1.

-----------------------

                                                                  PUBLIC VERSION

 In the published version of this decision, some information has been omitted pursuant to Article 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 general description.

                                                                 MERGER PROCEDURE
                                                             ARTICLE 6(1)(b) DECISION