Brussels, 29 August 2000
Commission gives Siemens conditional go-ahead to take control of Mannesmann subsidiaries Dematic, VDO and Sachs. Bosch's acquisition of Rexroth is still under examination
The European Commission today has given the go-ahead for Siemens AG to acquire control of the Mannesmann subsidiaries Dematic, VDO and Sachs. The authorisation has been granted in connection with the joint acquisition of Mannesmann's Atecs industrial holding company by Siemens and Bosch. In addition to Mannesmann-VDO, Mannesmann- Dematic and Mannesmann-Sachs, the holding company also includes Mannesmann-Demag and Mannesmann-Rexroth. Rather than controlling the five subsidiaries together through Atecs, the purchasers intend to acquire control using control agreements and other forms of agreement, whereby Demag will be the only Mannesmann subsidiary jointly controlled by Siemens and Bosch through Atecs, while Rexroth will be controlled solely by Bosch and VDO, Dematic and Sachs will be controlled exclusively by Siemens. Today's decision by the Commission today concerns only the latter cases. The Commission approved the acquisition of Demag by Siemens and Bosch on 11 August 2000. As regards Bosch's acquisition of Rexroth, the Commission has serious reservations about the compatibility of the operation with the single market and has therefore decided to conduct a detailed examination, which will last no longer than four months.
The authorisation of the Siemens acquisition has been granted on condition that the Dematic section dealing with high-powered plant for postal automation (MDPA) is sold. By acquiring Dematic, Siemens would have market shares of over 70% in several postal automation sectors in the EEA. Siemens is already the market leader and Dematic is in second place, some way ahead of other competitors. The Commission's decision was taken in the light of the large market share that would have been created by the merger and the fears of some players that, after the merger, the lack of any real alternative for customers would probably put Siemens in a position to be able to divide up the market in the long term by imposing its own standards for closed interfaces between the most important modules of modern sorting systems. Siemens' promise to sell removes all the relevant overlaps in Siemens' and Dematic's activities in this sector.
On conclusion of its examinations the Commission raised no objections to the acquisition of Sachs and VDO by Siemens. While there is no overlap between Siemens' and Sachs' business activities, Siemens' and VDO's activities do overlap. In various vehicle accessory markets, such as navigation systems, immobilisers, cockpits and locking systems, market shares of over 25% will be created. Having listened to the players in the market, however, the Commission reached the conclusion that existing keen competition and the buyer power of the automobile industry make it unlikely that Siemens will be able to dominate the market.
The Commission has reservations regarding the acquisition of Rexroth by Bosch, as Bosch and Rexroth are in strong positions on the market for piston pumps for industrial hydraulics. The Commission's investigations have revealed that Rexroth's axial-piston pumps compete with Bosch's radial-piston pumps and that therefore there is a common market for piston pumps. After listening to other players on the market, it was decided that it would not be enough for Bosch to promise to sell. For this reason the Commission has decided to undertake a more detailed examination of the Bosch/Rexroth case, which will last no longer than four months.
When evaluating the merger, the Commission also examined whether the joint acquisition of Atecs by Siemens and Bosch would encourage the companies to coordinate their activities. This was particularly important, as Bosch, like VDO and Siemens, is also active on several automobile accessory markets. After detailed investigation, the Commission concluded that this would not be the case, as it has been guaranteed that Bosch will have no practical influence on Siemens/VDO and contractual agreements prevent Bosch from having the right to obtain information. The same contractual agreements prevent Siemens from having any influence on Bosch/Rexroth.