Brussels, 9 April 2001
Commission clears Flextronics takeover of Ericsson's mobile operations
The European Commission has granted regulatory clearance to a proposal by Singapore-based electronics firm Flextronics International Ltd (Flextronics) to acquire the whole of the mobile handset manufacturing and distribution business of Telefonaktiebolaget LM Ericsson (Ericsson). Even after the acquisition Flextronics will continue to face strong competitive pressure from rivals as well as the strong buying power of customers such as Nokia, Motorola or Philips.
The Commission's examination of the case showed that there are a number of very strong suppliers of Electronic Manufacturing Services (EMS) to Original Equipment Manufacturers (OEM) both world-wide and on the European level. This precludes the possibility that Flextronics could acquire a dominant position in the market. EMS rivals include Solectron, SCI Systems and Celestica.
It must also be taken into account that EMS customers, OEMs, are sophisticated buyers, such as Nokia, Motorola, Siemens, Philips, Cisco Systems and Hewlett Packard, with considerable buying power. OEMs also tend to work with several EMS providers in parallel, even for the same products.
The Commission could therefore clear the transaction, which involves the take-over of plants, machinery and equipment, tooling and inventory as well as most employees.