CELEX: 31996M0775
Language: en
Date: 1996-07-01 00:00:00
Title: Commission Decision of 01/07/1996 declaring a concentration to be compatible with the common market (Case No IV/M.775 - Hong Kong Aircraft Engineering Services Limited) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31996M0775

Commission Decision of 01/07/1996 declaring a concentration to be compatible with the common market (Case No IV/M.775 - Hong Kong Aircraft Engineering Services Limited) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 226 , 03/08/1996 P. 0005

  COMMISSION DECISION of 01/07/1996 declaring a concentration to be compatible with the  common market (Case No IV/M.775 - Hong Kong Aircraft Engineering Services Limited) according  to Council Regulation (EEC) No 4064/89   (Only the English text is authentic).  The paper version of the decision is available through the sales offices of the Office of Official  Publications of the European Communities.  PUBLIC VERSION  MERGER PROCEDURE  ARTICLE 6(1)(b) DECISION   the Notifying Parties  Dear Sirs,  Subject:<ind> Case No. IV/M.775 - Hong Kong Aircraft Engineering Services Limited ("HAESL")  <Tab> <ind> Notification of 28 May 1996 pursuant to Article 4 of Council Regulation No. 4064/89  1.<ind> On 28 May 1996 Rolls-Royce plc ("Rolls-Royce") and Hong Kong Aircraft Engineering  Company Limited ("HAECO"), a subsidiary of John Swire & Sons Limited ("Swire"), notified their  creation of a joint venture company Hong Kong Aircraft Engineering Services Limited ("HAESL").  2.<ind> After examination of the notification, the Commission has concluded that the notified  operation falls within the scope of Council Regulation (EEC) N* 4064/89 and does not raise serious  doubts as to its compatibility with the Common market and with the functioning of the EEA  Agreement.  I.<ind> THE PARTIES AND THE OPERATION  3.<ind> Rolls-Royce is a United Kingdom public limited company. It is an engineering group  manufacturing aero, marine and industrial gas turbines, and power generation equipment, as well as  having nuclear engineering and materials handling activities. HAECO forms part of Swire, a United  Kingdom private limited company with business interests throughout the world, but principally in  the Far East, in aviation, property, shipping, insurance and other industrial and trading businesses.  HAECO currently carries out the aero-engine maintenance business of Swire and this, together with  the aero-engine overhaul interests of Rolls-Royce in the Far East and Australasia, will be transferred  to HAESL.  4.<ind> The operation consists  of the establishment of a joint venture company, HAESL, in Hong  Kong.  This company is not permitted to compete for business from customers whose principal place  of business is outside the Far East or Australasia without the agreement of both parent companies.  [Deleted; business secret.]. The shares of HAESL will be owned in equal proportions by the Rolls- Royce group and HAECO.    II.<ind> JOINT VENTURE  5.<ind> According to the terms of a shareholders' agreement entered into by the Rolls-Royce group  and HAECO, HAESL will have a board of seven directors, three of whom will be appointed by the  Rolls-Royce group and three by HAECO. The seventh director will be appointed, as General  Manager, by unanimous agreement of the two shareholders. The removal of the General Manager  and the appointment of any subsequent candidate requires the agreement of the two shareholders.  6.<ind> Certain matters, appertaining to the conduct of the business, require that two directors from  each of both the Rolls-Royce group and HAECO, vote in favour of the relevant resolution. Such  "reserved board matters" include:  <Tab> -<ind> capital expenditure in excess of that approved by the shareholders at the outset of the  joint venture project or that approved in the annual budget;  <Tab> -<ind> the adoption of any budget or forecast; and,  <Tab> -<ind> the appointment or removal of any senior executives (excluding the General  Manager).  7.<ind> On the basis of these elements it can be concluded that HAESL will be jointly controlled by  HAECO and the Rolls-Royce group.  III.<ind> CONCENTRATION  8.<ind> The joint venture agreement foresees that neither of the shareholders may transfer their  shares (outside their respective groups and assuming that neither parent company is subject to a  takeover) for a period of ten years. Moreover, HAESL has been created for an indefinite period of  time. Consequently, it is considered that the joint venture is intended to operate on a lasting basis.  Moreover HAESL will acquire all the relevant assets and personnel in order for it to perform all the  functions of an autonomous economic entity.  9.<ind> As regards the possible coordination of competitive behaviour between the undertakings  concerned it should be noted that HAECO will withdraw entirely from the aero-engine overhaul  business. [Deleted; business secret.].  10.<ind> The operation therefore constitutes a concentration within the meaning of Article 3 of the  Merger Regulation.  IV.<ind> COMMUNITY DIMENSION  11.<ind> The combined aggregate turnover of the undertakings concerned, in their latest financial  year exceeded ECU 5,000 million (Rolls-Royce ECU 4,339 million and Swire ECU 5,639 million).  The individual Community-wide turnover of both groups exceeds ECU 250 million (Rolls-Royce  ECU 1,648 million and Swire ECU 362 million). Neither of the undertakings concerned achieved  more than two-thirds of its aggregate Community-wide turnover within one and the same Member  State. The notified operation therefore has a Community dimension but does not constitute a  cooperation case under the EEA Agreement.  V.<ind> COMPATIBILITY WITH THE COMMON MARKET  12.<ind> HAESL is not active in the same geographic market as Rolls-Royce nor is it active in the  EEA. Therefore it can be concluded that the concentration is compatible with the common market  and the functioning of the EEA Agreement.  VI.<ind> CONCLUSION  13.<ind> For the above reasons, the Commission has decided not to oppose to the notified  transaction and to declare it compatible with the common market and the functioning of the EEA  Agreement. This decision is adopted in application of Article 6(1)(b) of Council Regulation (EEC) N * 4064/89.  <Tab> <Tab> <Tab> <Tab> <Tab> For the Commission