CELEX: 31992M0253
Language: en
Date: 1992-08-17 00:00:00
Title: COMMISSION DECISION of 17.08.1992 declaring a concentration to be compatible with the common market (Case No IV/M.253 - BTR / PIRELLI) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31992M0253

COMMISSION DECISION of 17.08.1992 declaring a concentration to be compatible with the common market (Case No IV/M.253 - BTR / PIRELLI) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 265 , 14/10/1992 P. 0000

 COMMISSION DECISION of 17.08.1992 declaring a concentration to  be compatible with the common market (Case No IV/M.253 - BTR /  PIRELLI) according to Council Regulation (EEC) No 4064/89  (Only the English text is authentic)  The paper version of the decision is available through the  sales offices of the Office of Official Publications of the  European Communities. PUBLIC VERSION MERGER PROCEDURE ARTICLE 6(1)(b) DECISION Registered with advice of delivery To the notifying party Dear Sirs,  Subject: <ind> Case No. IV/M253 - BTR/Pirelli <ind> <ind> Notification of 16 July 1992 pursuant to Article 4  of Council Regulation No. 4064/89  1.<tab> The notification concerns the proposed acquisition by  BTR Plc ("BTR") of the EC automotive weatherseals,  antivibration systems and automotive coolant hoses businesses  of Pirelli SpA ("Pirelli"), excluding Pirelli's Italian  subsidiaries involved in these businesses.  2.<tab> After examination of the notification the Commission  has concluded that the proposed operation falls within the  scope of the Council Regulation No. 4064/89 and does not raise  serious doubts as to its compatibility with the common market.  I.<ind> THE PARTIES AND THE PROPOSED OPERATION  3.<tab> BTR is a conglomerate group with activities in the  industrial, transportation (including automotive components),  construction, control systems and electrical and consumer  related sectors.  Pirelli's principal activities include the  manufacture and sale of tyres and cables, together with other  automotive components.  4.<tab> By the proposed transaction, BTR will acquire  production facilities for automotive weatherseals,  antivibration systems and automotive coolant hoses in [Deleted.   Details of production facilities are business secrets.], where  it has only a limited presence to date.  Production facilities  will also be added for both automotive weatherseals and  antivibration products in [Deleted.  Details of production  facilities are business secrets.] and for antivibration  products in [Deleted.  Details of production facilities are  business secrets.].   II.<ind> CONCENTRATION  5.<tab> The acquisition by BTR of the EC antivibration systems,  automotive weatherseals and automotive coolant hoses businesses  of Pirelli (excluding its Italian subsidiaries involved in  these businesses) is a concentration within the meaning of  Article 3(1)(b) of the Merger Regulation.  III. COMMUNITY DIMENSION  6.<tab> The proposed operation has a Community dimension.  The  combined aggregate worldwide turnover of BTR and the EC  antivibration systems, automotive weatherseals and automotive  coolant hoses businesses of Pirelli (excluding the Italian  businesses) in the last financial year exceeded 5000 million  ECU (9.6 million ECU [Typographical error:  9.6 billion ECU.]  for BTR, and 380 million ECU for Pirelli), and the aggregate  Community turnover of each exceeded 250 million ECU.  The  parties do not achieve more than two-thirds of their turnover  in one and the same Member State.  IV.<ind> COMPATIBILITY WITH THE COMMON MARKET  a. Automotive weatherseals  Relevant product market  7.<tab> Automotive weatherseal products include weatherseals  for vehicle doors, windows, sunroofs, boots and tailgates,  providing a barrier against wind, rain, dust and noise.  Most  manufacturers produce a range of both window and other  weatherseals.  8.<tab> All sales by BTR and the acquired businesses are in the  OEM (original equipment market) or OES (sales as spare parts  via the vehicle industry's own sales system to authorised  dealers and workshops) markets.  Thus to the extent that any  aftermarket exists in this sector it is not relevant to the  present case.  Geographic reference market  9.<tab> The market for automotive weatherseals can be  considered to be the Community.  The major vehicle producers  have plants in a number of Member States and purchase on a  European-wide basis.  International price comparisons are  therefore possible and in fact prices are broadly comparable  even if they vary within individual Member States.  Moreover, a  number of vehicle producers have recently introduced common  European or even global purchasing policies for their group or  in alliance with another group.  Proximity of the supplier to vehicle producers is becoming  increasingly irrelevant.  Producers are not prepared to pay any  premium in order to be supplied locally.  Transport costs  within the Community are lower than 5%.  As a result, suppliers take into account demand from all over  Europe.   A significant part of total sales is made on a cross- border basis.   10.<tab> Spain can be included in this Community market from 1  January 1993 when import duties currently imposed on rubber  based car components will be abolished.  In fact duties have  already been reduced to 1.5%.  A number of the major vehicle  producers and principal suppliers are already present in this  country and prices are generally considered to be the lowest in  Europe.  Thus it would seem that conditions of competition in  Spain are already comparable with other Member States and this  will certainly be the case as from 1 January 1993.  Assessment  Horizontal effects  11.<tab> BTR estimates the total EC market for automotive  weatherseals to be [less than 1,500 million ECU.].  As a result  of the proposed acquisition, BTR will become the leader for  this market in the Community with a market share of around  [less than 35%.], overtaking Laird, the current leader [less  than 35%.].  While these two companies will be the strongest  competitors in the market, BTR will also have to compete with a  large number of other smaller but significant players,  including Standard Product, Contitech (a subsidiary of the  German Continental group), Hutchinson (part of the French Total  group) and Saargummi.  In addition, some vehicle producers  manufacture themselves a certain proportion of their own  requirements.  12.<tab> Moreover, suppliers are under increasing pressure to  be competitive as vehicle producers are seeking to reduce costs  of components, as illustrated by the trend toward central  purchasing or common purchasing structures, which is intended  to reduce the number of their suppliers and the prices of  components.  13.<tab> Taking into account both supply and demand side  considerations, therefore, the proposed acquisition will not  lead to a dominant position on the OEM/OES weatherseals  market.  Vertical effects  14.<tab> Both wire carrier and stamped metal are used to  manufacture weatherseals.  BTR is a significant producer of  wire carrier in the Community.  However, since virtually all  weatherseals suppliers use both technologies and could easily  increase the use of one over the other, no significant vertical  effects are likely to occur as a result of the proposed  acquisition.  Conclusion  15.<tab> For the above reasons, the proposed acquisition would  not lead to the creation or reinforcement of a dominant  position in the Community.  b. Antivibration systems  Relevant product market  16.<tab> Antivibration products are rubber-based components  designed to reduce or eliminate vibration in a variety of  applications.  A number  of different products are supplied for  the various applications.  Some suppliers tend to specialise in  particular product groups.  However, each of the principal  suppliers already produces a full range of products or  possesses the design and technical capacities to do so.  17.<tab> BTR estimates that around 75% of sales of  antivibration products in the EC are for automotive  applications, the remaining sales being for industrial  application (general industrial, rail and marine).  For the  purposes of the present case, it is not necessary to determine  whether the automotive and industrial sectors constitute  distinct markets because even on the narrowest market  definition no dominant position arises.  18.<tab> In the automotive sector, all sales by BTR and  virtually all by Pirelli are in the OEM or OES markets.  Thus,  to the extent that any aftermarket exists in this sector, it is  not relevant to the present case.  Geographic reference market  19.<tab> For the same reasons as given for automotive  weatherseals above, the antivibration systems market is the  Community, including Spain, again for the same reasons.  Assessment  20.<tab> As a result of the proposed acquisition, BTR will  attain a market share of less than 25% [between 10% and 20%.]  within the Community for antivibration products as a whole, the  total EC value of which is estimated by BTR at [less than 1,500  million ECU.].  21.<tab> If the automotive and industrial sectors are  distinguished, BTR's market share will also be less than 25%  [between 10% and 20%.] for the former and less than 10% for the  latter [deleted business secret.].  Conclusion  22.<tab> In the light of these market shares, and given the  significant countervailing power of the vehicle producers  referred to above, the proposed acquisition will not result in  a dominant position in the Community.  c. Automotive coolant hoses  Relevant product market  23.<tab> Automotive coolant hoses are hoses used for radiators,  cooling and heating systems including passenger vehicle turbo  coolers.  Although some suppliers of automotive hoses tend to  specialise in particular products, practically all suppliers of  automotive cooling or turbo hoses could manufacture both  hoses.  24.<tab> All sales by BTR and Pirelli are in the OEM and OES  markets.  Thus, to the extent that any aftermarket exists in  this sector, it is not relevant to the present case.   Geographic reference market  25.<tab> For the same reasons as given above, the automotive  coolant hoses market is the Community, including Spain, again  for the same reasons.  Assessment  26.<tab> As a result of the proposed acquisition, BTR will  attain a market share of less than 25% [ deleted business  secret.] for automotive coolant hoses in the Community, the  total EC value of which is estimated by BTR at [less than 500  million ECU.].  Conclusion  27.<tab> As a result of these low market shares, and again  considering the countervailing power of the vehicle producers,  the proposed acquisition will not create or strengthen a  dominant position in the common market.  V.<ind> ANCILLARY RESTRAINTS  28.<tab> The parties accept certain obligations as to the  disclosure and use of confidential information.  29.<tab> Pirelli agrees for the period between the date of the  agreement and completion to ensure that the acquired businesses  will not carry on business other than in the normal course.  30.<tab> It is envisaged the acquired businesses may continue  to supply the businesses retained by the Pirelli group, and  vice versa, with a certain quantity of rubber compound for a  period up to five years.  31.<tab> BTR agrees that it will not object to the use by the  Pirelli group of certain patents and pending patent  applications and the "Elephant" trademark for a period of five  years.  Pirelli agrees that it will not object to the use by  BTR of certain patents and patent applications for the life of  such patents.  There is also provision for the exchange of  information in connection with know-how for a period of five  years.  32.<tab> In addition, the parties have agreed to the permission  and prohibition on the use of certain trademarks, registered  and unregistered, and corporate names.  In addition, BTR agrees  that the Pirelli group will be vested with exclusive rights of  certain trademarks, whether by ownership of those marks or  otherwise, with respect to certain tyre related products.  33.<tab> Furthermore, a non-competition agreement has been  concluded whereby the businesses retained by the Pirelli group  agree, for a period of five years, not to compete (including  the non-solicitation of employees and customers) with the  businesses being sold.  The sale involves the transfer of know- how as well as goodwill.   34.<tab> These agreements are directly related and necessary to  the implementation of the concentration and are, therefore,  ancillary within the meaning of the Regulation.   VI.<ind> FINAL ASSESSMENT  33.<tab> Based on the above findings, the Commission has come  to the conclusion that the proposed concentration does not  raise serious doubts as to its compatibility with the common  market.  For the above reasons the Commission has decided not to oppose  the notified concentration and to declare it compatible with  the common market. This decision is adopted in application of  Article 6(1)(b) of Council Regulation No. 4064/89.  For the Commission