CELEX: 31996M0741
Language: en
Date: 1996-05-24 00:00:00
Title: Commission Decision of 24/05/1996 declaring a concentration to be compatible with the common market (Case No IV/M.741 - Ford / Mazda) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

Avis juridique important

|

31996M0741

Commission Decision of 24/05/1996 declaring a concentration to be compatible with the common market (Case No IV/M.741 - Ford / Mazda) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 179 , 22/06/1996 P. 0003

  COMMISSION DECISION of 24/05/1996 declaring a concentration  to be compatible with the common market (Case No IV/M.741 -  Ford / Mazda) 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 party  Dear Sirs,  Subject :<ind> Case No IV/M. 741  FORD/MAZDA  <ind> <ind> Your Notification of 17.04.1996 pursuant to  Article 4 of Council Regulation No 4064/89  1.<ind> On 17.04.1996 the Commission received a notification  of a proposed concentration pursuant to article 4 of Council  Regulation (EEC) no. 4064/89 by which FORD MOTOR COMPANY  acquires within the meaning of article 3(1)b of the Merger  Regulation sole control of the whole of MAZDA MOTOR  CORPORATION by way of acquisition of shares and contract of  management.  I<tab> The parties  2.<ind> FORD MOTOR COMPANY (FORD) is a US corporation active  in the manufacture, distribution and leasing of automotive  vehicles and the provision of financial services to  purchasers of automotive vehicles.  3.<ind> MAZDA MOTOR CORPORATION (MAZDA) is a Japanese  company active in the manufacture and distribution of  automotive vehicles and the provision of financial services  to purchasers of automotive vehicles.  II<tab> Concentration  4.<ind> In 1979 FORD and MAZDA entered into an agreement  under which FORD acquired a 24.5% shareholding in Mazda. The  1979 agreementbetween FORD and MAZDA also included  provisions concerning the development of mutual supply  arrangements and technical cooperation including the  establishment of joint operations to sell vehicles in Japan  and manufacture vehicles in the United States. Although the  1979 agreement established strong cooperation ties between  the two undertakings including FORD's being represented  since 1993 on MAZDA's Board of Directors by 7 out of a total  of 43 members the two companies maintained their respective  operational autonomies.  5.<ind> In April 1996, by an amendment to the original 1979  agreement the already existing links between FORD and MAZDA  were reinforced:   <tab> <ind> FORD increased its shareholding to 33.4%  [DELETED BUSINESS SECRETS  The omitted part of the first and  third indent of paragraph 5 contains a detailed description  of the rights held by FORD concerning the business conduct  of MAZDA.]  <tab> <ind> FORD will have the right to nominate the  president of MAZDA who presides over and directs the  meetings of the Executive Committee. The Executive Committee  effectively manages the business of the company.  <tab> <ind> [......].  6.<ind> The operation is therefore a concentration within  the meaning of article 3(1) of the Merger Regulation since  FORD will acquire the possibility of exercising decisive  influence on the business conduct of MAZDA.  III<tab> Community Dimension  7.<ind> The aggregate worldwide turnover of FORD (109.3  billion ECU) and MAZDA (20.9 billion ECU) exceeded, in 1995,  5 billion ECU. The aggregate Communitywide turnover of each  of the two undertakings amounted the same year to more than  250 million ECU and the two companies did not achieve more  than two thirds of their aggregate Communitywide turnover  within one and the same Member State.  <ind> Therefore, the concentration has a Community  dimension.  IV <tab> Compatibility with the Common Market   A. <tab> Relevant Product Markets  8.<ind> The concentration affects the markets for passenger  cars and commercial vehicles.  <tab> Passenger cars  9.<ind> The passenger car market has traditionally been  segmented on the basis of a number of objective criteria  like engine size or length of car. In the car price surveys  carried out by the Commission a segmentation is used which  corresponds to a large extent to the one generally used in  the industry [See case no IV/M. 416  BMW/ROVER].  10.<ind> FORD also uses a segmentation for marketing  purposes which largely corresponds to the segmentation  applied by the Commission with the major exception that the  multi purpose/sports category presented by the Commission is  further broken down by FORD in three different categories (S  class, M class and J class) as becomes apparent from the  following listing concerning FORD's segmentation:  <tab> A class <tab> =<tab> Mini <tab> <tab> <tab> vehicles  <ind> B class <tab> =<tab> SuperMini <tab>     "  <tab> C class <tab> =<tab> Lower Medium <tab>     "  <tab> C/D class <tab> =<tab> Upper Medium <tab>     "  <tab> D/E class <tab> =<tab> Executive <tab> <tab>     "  <tab> S class <tab> =<tab> Sports Coupé <tab>     "  <tab> M class <tab> =<tab> Multipurpose <tab>     "  <tab> J class <tab> =<tab> Sports Utilities <tab>     "  11.<ind> The boundaries between segments are blurred by  factors other than size or length of car. These factors  include price, image and the amount of extra accessories.  Also, the tendency to offer more and more options like ABS,  airbags, central locking etc. in small cars further dilutes  the traditional segmentation.  <ind> On the other hand the traditional segmentation is  generally used by the industry and it still seems to be  regarded as an important indicator for the positioning of a  car in the market place. In particular some differences  still exist in price, technology or engineering requirements  between the top and bottom end of the car market. In the end  it can however be left open whether, for the purposes of the  competitive analysis, the car market should be considered as  one product market. Even on the basis of the narrowest  market definition, the concentration will not lead to the  creation or strengthening of a dominant position, as  explained below.  Commercial Vehicles  12.<ind> FORD and MAZDA only sell in the Community  commercial vehicles under 5 tons. Traditionally FORD has  split its commercial vehicles into two different segments:  The Light Commercial Vehicles (LCV) segment which includes  vehicles under 1.8 tons and the Medium (MCV) segment for  vehicles comprised between 1.8 and 3.5 tons. Although the  main intended use of this type of vehicle is for commercial  or collective services it can also be used for private,  family purposes in some countries, for instance in the USA  or in Scandinavia. However, in general, this type of vehicle  is bought for commercial services and also for collective  and governmental services as for example local deliveries to  shops and businesses, courier and parcel delivery services,  mobile workshops and service vans, as well as fire, police  and ambulance services.  B.<tab> Geographic Markets  13.<ind> From a supply side perspective, production in the  car industry is international or even global in its outlook.  MAZDA, for instance does not have manufacturing facilities  in Europe and therefore imports all the vehicles it sells in  the Community with the exception of the model 121 car which  is produced by FORD under a manufacturing agreement. FORD on  the other hand, manufactures locally the overwhelming  majority of the vehicles it sells in the Community.  14.<ind> Although there is an EU/Japan automobile  arrangement which provides for a progressive opening to  exports from Japan of five previously restricted national  markets within the EU and there are also import duties the  parties estimate that these factors have no appreciable  effects on imports of MAZDA's cars.  15.<ind> Significant improvements have been accomplished  within the Community towards a progressive harmonization of  the conditions of competition in particular as regards the  removal of technical barriers and restrictions concerning  distribution systems which combined with other factors such  as low transportation costs and the presence of major  manufacturers in all Member States may constitute indicators  of the existence of a Community wide market. However  substancial differences still remain concerning inter alia  prices, vehicle taxation, distribution systems and  penetration rates of major players within Member States  which tend to indicate the contrary.  16.<ind> For the purpose of this case, however, the exact  definition of the relevant geographic market can be left  open because even on the basis of the narrowest market  definition, the concentration will not lead to the creation  or strengthening of a dominant position (see below).  C<tab> Competitive Assessment  1)<tab> Passenger Cars  17.<ind> In 1995 about 11.9 million passenger cars were sold  in the Community. FORD and MAZDA sold within the Community  1.4 million and 166 thousand cars respectively which  corresponded to market shares of 11.9% (FORD) and 1.4%  (MAZDA) for the same year.  18.<ind> At Community level, based on 1995 statistical data,  FORD and MAZDA will have a combined market share of 13.3%.  The new entity will be the number two player behind the VAG  Group with about 16.4%. There will remain other important  competitors such as the GM Group (13%), the PSA Group (12%)  and RENAULT and FIAT with around  10% each. Therefore, as  far as the overall passenger car market at Community level  is concerned the concentration will not create or reinforce  a dominant position in these markets.  19.<ind> The concentration will not have any significance as  regards segment A (minicars) where both companies, FORD and  MAZDA, are not present and segments D/E (executive class), I  (sports utilities) and M (Multipurpose) where either there  is no overlap at all or where there is an overlap combined  market shares at Community or national level will not exceed  10%.  20.<ind> As regards the remaining segments of the Community  car market, namely segments B(small cars), C (lower medium),  C/D (upper medium) and S (sports) combined market shares at  Community level range between 12.5% (segment S) and 16.2%  (segment C/D). At national level combined market shares  slightly exceeding 25% are attained in three cases only: in  the UK for segments C/D (FORD 24.4%, MAZDA 1%) and S (FORD  20.5%, MAZDA 5.9%) and in Denmark for segment S (FORD 1.4%,  MAZDA 26.1%).  21.<ind> However the combined position of the parties in the  markets mentioned above does not mean that the concentration  will lead to the creation or reinforcement of a dominant  position. Indeed, asregards the UK S segment the GM Group  will keep its leading position with more than 35% of the  market. The Japanese manufacturers Toyota, Nissan and Honda  as well as the German group VW will also keep significant  positions in this market with individual market shares  comprised between 5 and 10%. In the other two circumstances  where combined market shares exceeded 25% namely for segment  S in Denmark and segment C/D in he UK there is only a  limited overlap as FORD's market share in Denmark for  segment S and MAZDA's market share in the UK C/D segment are  in both cases below 1.5%. Furthermore, all major European  and Japanese manufacturers are present in the UK C/D segment  market where for instance the GM Group ranks second with  about 17% of  market. Finally it has to be noted that the  Danish S segment market is a very small one. In 1995 from a  total of 150.000 vehicles belonging to the S segment which  were sold in the community only about 300 were sold in  Denmark, of which 77  by MAZDA and only 4 by FORD.  2)<tab> Commercial vehicles  22.<ind> In 1995 about 1.5 million commercial vehicles below  3.5 tons were sold within the Community. FORD with about 225  thousand vehicles had a market share of 14.9% while MAZDA  with 7,400 vehicles sold had a market share of 0.5% only.  23.<ind> On the basis of the two relevant segments which  have been identified it can be stated that Mazda's activity  in the lower segment, the LCV segment, was insignificant in  the Community in 1995 with less than 200 vehicles sold and a  market share close to 0%. For the MCV segment MAZDA's sales  accounted for about 1% of the total Community market, while  FORD has a Communitywide market share of 19.9%.  24.<ind> Combined market shares in the MCV segment above 25%  are attained in two countries only, namely in the UK with  45.7% ( FORD 44.4%, MAZDA 1.3%) and in Ireland with 39.7%  (FORD 38.7%, MAZDA 1%). However, in spite of the high  combined market shares attained in these two countries the  concentration will not lead to the creation or the  reinforcement of a dominant position. Indeed, in both  countries the increment of market shares is low since MAZDA  has only 1.3% and 1% market shares respectively in the UK  and Ireland. Furthermore, in both countries the main  European and Japanese competitors are present in particular  in the Irish market where TOYOTA and NISSAN hold market  positions above 20% and 10% respectively. Finally, it has to  be noted that in the UK FORD's market share has been  declining in the last 3 years falling from 47.4% in 1993 to  45.2% in 1994 and to 44.4% in 1995. This trend is likely to  continue in 1996 as market data for the first quarter of  1996 shows that based on the sales for this period FORD's  market share is now established around 40% due to intense  competition from other manufacturers and in particular from  MERCEDES.  25.<ind> It has also to be noted that about half of FORD's  UK sales within the MCV segment goes to big customers owning  large fleets and these customers are very sophisticated  buyers with significant bargaining power.  V<tab> Conclusion  26.<ind> 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 and the functioning of the EEA Agreement.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.  <tab> <tab> <tab> For the Commission,