CELEX: 31992M0234
Language: en
Date: 1992-07-15 00:00:00
Title: COMMISSION DECISION of 15.07.1992 declaring a concentration to be compatible with the common market (Case No IV/M.234 - GECC / AVIS LEASE) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31992M0234

COMMISSION DECISION of 15.07.1992 declaring a concentration to be compatible with the common market (Case No IV/M.234 - GECC / AVIS LEASE) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 201 , 08/08/1992 P. 0000

 COMMISSION DECISION of 15.07.1992 declaring a concentration to  be compatible with the common market (Case No IV/M.234 - GECC /  AVIS LEASE) according to Council Regulation (EEC) No 4064/89  (Only the English text is authentic)  The paper version of the decision is available through the  sales offices of the Office of Official Publications of the  European Communities. PUBLIC VERSION MERGER PROCEDURE ARTICLE 6(1)(b) DECISION Registered with advice of delivery To: name(s) of the party (ies) Dear Sirs, Subject: <ind> Case No. IV/M.234 - GECC / Avis Lease <ind> <ind> Your notification of 12.06.1992 pursuant to  Article 4 of (EEC) Council Regulation No. 4064/89  1.<ind> The present case concerns the proposed acquisition by  General Electric Capital Corporation (GECC), through its  subsidiary GE Capital Fleet Services (GECFS), of Avis Lease  from Cilva Holdings plc (CILVA).  2.<ind> After examination of the notification, the Commission  has concluded that the notified operation falls within the  scope of Council Regulation No. 4064/89 and does not raise  serious doubts as to its compatibility with the common market.  I.<tab> THE PARTIES  3.<ind> GECC forms part of the (US) General Electric Company  (GEC). The latter is one of the world's largest and most  diversified industrial conglomerates. GECC itself operates  primarily in asset management and financial services. GECFS is  a leading vehicle fleet management company in North America.  4.<ind> Avis Lease specialises in full service vehicle contract  hire for periods exceeding 364 days with a variety of fleet  management and maintenance programs. It is active throughout  Europe. Avis Rent-a-Car Ltd, which rents cars to individuals  for periods not exceeding 364 days, is not part of the  operation and is being retained by CILVA's subsidiary, Avis  Europe.  II.<tab> CONCENTRATION  5.<ind> The acquisition will be realised through the purchase  of the shares of the local companies in [The countries  concerned are Belgium, France, Germany, Italy, Luxembourg,  Portugal, Spain, Switzerland and the UK.] and through the  purchase of assets in [The countries concerned are Belgium,  France, Germany, Italy, Luxembourg, Portugal, Spain,  Switzerland and the UK]. This will give GECFS control of the  businesses concerned. The operation therefore constitutes a  concentration within the meaning of Article 3 of the  Regulation. [Deleted for publication]  III.<tab> COMMUNITY DIMENSION  6.<ind> Virtually all the leases of Avis Lease are operating  leases. These must be distinguished from financial leases.  7.<ind> Under an operating lease the risks of ownership are  retained by the lessor: the duration of the lease does not  cover the major part of the asset's life, ownership is not  transferred to the lessee at the end of the lease term, the  lease does not contain a bargain purchase option and the  present value of the minimum lease payments are less than the  asset's fair value. The cost of other related services are  included in the lease payments. In the present case this  includes vehicles maintenance, repair, servicing, insurance,  fleet management services, etc. On the other hand a financial  lease primarily functions as a loan by the lessor to enable the  lessee to purchase a given asset.  8.<ind> Avis Lease is not subject to the authorisation and  supervision under the banking laws of any Member State. Its  leasing activities have not been treated as financial leasing  in any Member State. Its activities do not fall within the  scope of the EC Banking Directives [Council Directive 77/780;  Council Directive 89/646].  9.<ind> Consequently, Article 5(3) does not apply since  operating lease turnover is the correct basis for determining  the turnover of Avis Lease for the application of the  thresholds in Article 1 of the Regulation.  10.<ind> The undertakings concerned have a worldwide turnover  exceeding 5000 mECU in 1991 (GEC: 48 577 mECU; Avis Lease: 389  m ECU). Both GEC and Avis Lease have a Community wide turnover  exceeding 250 mECU. Neither achieved more than two-thirds of  their Community wide turnover within one and the same Member  State. The concentration therefore has a Community dimension.  IV.<tab> COMPATIBILITY WITH THE COMMON MARKET  11.<ind> The operation primarily concerns the contract hire of  passenger cars to commercial undertakings over a two to three  year period. Neither GECFS nor GECC nor GEC is active in this  field within the Community. The only possible related activity  of the acquiring party is GE Capital Motor Finance (CMF) and  Commercial Equipment Financing (CEF). The former leases  vehicles to individuals either through dealers or through the  motor vehicle manufacturers. The latter leases commercial  trucks and trailers. Both are only active in the UK for  financial leasing and have a very small market presence.  Consequently, on a narrow product market definition the  concentration does not bring about any addition of market share  within the Community, and or a very wide definition, the level  of existing market activity is insignificant.  12.<ind> As regards Avis Lease, there is no Member State, with  the exception of Spain, for which its market share exceeds 10%.  This is on the basis of a narrow product market definition  limited to the contract car hire market which excludes the  other two sectors of the company car market, namely fleet  management and finance leasing. With respect to Spain, the  contract car hire market is at an early stage of development  and  is growing rapidly. Furthermore, although Avis Lease has a  market share [Exceeding 20%], there are two important  competitors, Lease Plan and Dial, with comparable market  shares.  13.<ind> The proposed concentration will therefore not create  or strengthen a dominant position as a result of which  effective competition will be significantly impeded in the  common market or in a substantial part of it.  V.<tab> ANCILLARY RESTRICTIONS  14.<ind> The parties have submitted four restrictions as being  ancillary to the concentration. These are:  <tab> i)<ind> Avis Europe has agreed not to compete with GECFS  for a period of five years;  <tab> ii)<ind> GECFS will have the use of the Avis Trademark  Licence for [Deleted for publication] years;  <tab> iii)<ind> under the RAC Services Agreement, Avis Rent-a- Car Ltd will provide certain services to GECFS in relation to  [Deleted for publication]; the RAC Services Agreement is valid  for [Not longer than 5 years] but may be renewed;  <tab> iv)<ind> under the [Deleted for publication] Services  Agreement, Avis Europe will provide certain [Deleted for  publication] support to GECFS until [Not longer than 5 years].  15.<ind> In order for GECFS to acquire the know-how and  expertise of Avis in the contract hire business, it is  necessary for the parties to cooperate for a transitional  period on the basis of the RAC Services Agreement and the  [Deleted for publication]) Services Agreement. [Deleted for  publication] In this light, a five-year non competition  agreement can be accepted.  <ind> The use of the Avis Trademark Licence for a period of  [Deleted for publication] years can be considered as necessary  for GECC to take over the full value of the business being  acquired.  <ind> As regards the [Deleted for publication] under the RAC  Services Agreement, these can be accepted for a period of [Not  longer than 5 years]. Such a period is sufficiently long for  GECFS to acquire the necessary skill and experience to  autonomously operate the business being purchased, and the  parties have not put forward valid factors objectively  justifying a longer period.  <ind> The [Deleted for publication] Services Agreement is of  short duration and can be accepted.  <ind> Therefore the above restrictions are covered by the  present decision to the extent described above.  VI.<tab> CONCLUSION  16.<ind> For the above reasons the Commission has decided not  to oppose the notified concentration and to declare it  compatible with the common market. This decision is adopted in  application of Article 6(1)(b) of Council Regulation No.  4064/89.  For the Commission,