CELEX: 31996M0798
Language: en
Date: 1996-08-19 00:00:00
Title: Commission Decision of 19/08/1996 declaring a concentration to be compatible with the common market (Case No IV/M.798 - General Electric / CompuNet) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31996M0798

Commission Decision of 19/08/1996 declaring a concentration to be compatible with the common market (Case No IV/M.798 - General Electric / CompuNet) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 324 , 30/10/1996 P. 0010

  COMMISSION DECISION of 19/08/1996 declaring a concentration to be  compatible with the common market (Case No IV/M.798 - General Electric /  CompuNet) 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  To the notifying parties   Dear Sirs,  Subject :<ind> Case No IV/M.798  GENERAL ELECTRIC / COMPUNET  <ind> <ind> Notification of 15.07.1996 pursuant to Article 4 of Council  Regulation No 4064/89  1.<ind> On 15.07.1996, the Commission received a notification of a  proposed concentration pursuant to Article 4 of a Council Regulation (EEC)  No. 4064/89 by which  GE Capital Technology Services GmbH and GE Capital  Computer Services GmbH, whollyowned subsidiaries of the General Electric  Capital Corporation (GE Capital) intend to acquire sole control of the  German company CompuNet Computer AG (CompuNet) by way of purchase of its  entire issued share capital.  2.<ind> After examination of the notification, the Commission has  concluded that the notified operation falls within the scope of Council  Regulation (EEC) No. 4064/89 and does not raise serious doubts as to its  compatibility with the common market and with the functioning of the EEA  Agreement.  I.<ind> THE PARTIES' ACTIVITIES AND THE OPERATION  3.<ind> GE Capital is a wholly owned subsidiary of General Electric  Capital Services,  Inc. which is in turn a whollyowned subsidiary of the  U.S. Corporation General Electric Company (GE). GE Capital operates mainly  in several finance and insurance segments. GE Capital Technology  Management Services, an American GE Capital subsidiary, provides desktop,  networking and outsourcing services for businesses. These services are  performed in the United States, Canada and Australia.  4.<ind> CompuNet is a German company. Its business activities include  sale, supply and installation of networked computer systems (PC hard and  software, work stations, printers etc) and computer systems services  (consulting, processing services including outsourcing of certain data  processing needs). CompuNet carries out its business exclusively in  Germany.   5.<ind> The share sale and purchase agreement of 29 June 1996 provides for  the purchase of all the shares in CompuNet. This transaction constitutes a  concentration within the meaning of Article 3(1)b of the Merger Regulation  since GE Capital will acquire sole control of CompuNet.  II.<ind> COMMUNITY DIMENSION   6.<ind> GE and CompuNet have a combined aggregate worldwide turnover in  excess of 5,000 million ECU (GE 52,534 million ECU and CompuNet 736  million ECU). Each of them has a Communitywide turnover in excess of 250   million ECU (GE 6,676 million ECU and CompuNet 736 million ECU), but they  do not achieve more than twothirds of their aggregate Communitywide  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.  III.  COMPATIBILITY WITH THE COMMON MARKET  <ind> A. Relevant product market  7.<ind> CompuNet provides integrated solutions for its customers. Its  range of clients goes from small companies and associations to big  international companies. The activities of CompuNet could be grouped as  follows:  <ind> <ind> (i)<ind> sale, supply and installation of computer systems: PC  hardware and software, work stations, printers and other peripheral  equipment (computer sales);  <ind> <ind> (ii)<ind> computer services: consulting, processing services,  developing of software, outsourcing of certain data processing needs  (computer services).  8.<ind> The Commission in previous cases (IV/M.560  EDS/Lufthansa,  IV/M.492  Kloeckner & Co./ Computer 2000 AG,  IV/M.336 IBM France/CGI and  IV/M.112 EDS/SD Scico) has argued that the information technology (IT)  services market could be subdivided in several ways. A major distinction  has been made between IT services and IT software. However the Commission  did not consider it necessary to delimitate the different segments of the  market for the assessment of the abovementioned cases.  9.<ind> Because the notified operation is in essence a merger between  parties without horizontal or vertical overlappings, for the purpose of  this case the exact definition of the relevant product market can be left  open since the concentration is not likely to raise serious doubts as to  its compatibility with the in the EEA area even on the basis of the  narrowest  product market definition.  <ind> B. Relevant geographic market  10.<ind> The Commission in the previous cases mentioned in paragraph 8  above, has taken into account the importance of being able to communicate  in the customer's own language and the importance of a local presence.  These arguments play in favour of national markets. Nevertheless the  precise definition of the geographical market has always been left open.  11.<ind> Since GE does not operate in the IT market in the EU, and  CompuNet operates only in Germany, no geographical overlap exists. Thus it  is not necessary to delineate the relevant geographic markets in this case  because, as in all alternative geographic markets considered, effective  competition would not be significantly impeded.  <ind> C. Analysis/Assessment   12.<ind> The end user typically demands a "whole" product consisting of  hard and software plus related services. Almost every computer company is  at least potentially able to satisfy such demand, although some of them  concentrate on small niches of the market. In the Computer Sales market  segment CompuNet generates sales of[business secret] mio ECU in 1995.   Based on data provided by the European Information Technology Observatory,  a Task Force representing IT associations, and also by Zentralverband  Elektrotechnik und Elektroindustrie, a leading association of the German  electronic industry, CompuNet reached a market share of [below 1%] in the  EU and [below 2%]  in Germany. However,  CompuNet only intermediates  between the computer manufacturer and its client. Market shares of main  frame manufactures in Germany are  SiemensNixdorf, below 15%, IBM, below  10%, Vobis, below 10% and Peackock, below 10%.  13.<ind> On the computer services market segment CompuNet generated a  turnover of [business secret] mio ECU and achieved market share of [below  1%]  in the EU and [below 1%] in Germany, according to the above mentioned  sources. Main competitors in the German market include IBM and  SiemensNixdorf (below 15% each), Debis Systemhaus (below 10%) and EDS and  SAP (below 5% each)  14.<ind> For the above reasons, the concentration will not create or  strengthen a dominant position in the EEA territory or a substantial part  of it.    CONCLUSION  15.<ind> For the above reasons, the Commission has decided not to oppose  the notified operation and to declare it compatible with the common market  and with the functioning of the EEA Agreement. This decision is adopted in  application of Article 6(1)(b) of Council Regulation No 4064/89.  For the Commission,