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IP/11/141

Brussels, 9 February 2011

Mergers: Commission clears Prysmian's proposed acquisition of rival cable maker Draka Holding

The European Commission has approved under the EU Merger Regulation the proposed acquisition of the Dutch cable manufacturer Draka Holding by Italy's Prysmian SpA, another cable manufacturer. The Commission's investigation has shown that the merged entity will continue to face effective competition in the production of optical fibre cables and general wiring despite becoming the European leader in the markets concerned.

Both Prysmian and Draka are active worldwide in the development, design, production, supply and installation of cables for applications in the energy and telecommunications industries.

On 22 November 2010 Prysmian and Draka entered into a merger agreement relating to a public offer to be made by Prysmian for all issued and outstanding ordinary shares of Draka. Prysmian launched its public offer on 6 January 2011.

The proposed transaction was notified to the Commission for regulatory clearance on 5 January.

Through the proposed transaction, Prysmian will become the leading supplier of (terrestrial) optical fibre cables both worldwide and in the EEA. Optical fibre cables are typically deployed for the transmission of electronic communications signals in local area networks (LANs), "last-mile" access networks, metropolitan area networks, and long-distance networks using broadband technology.

Prysmian will also become the leading supplier in the EEA of general wiring, which covers a wide variety of low/medium voltage cables used for electrical systems in buildings and industrial applications, for the internal wiring of electrical equipment, for power and signal supply of mobile devices (such as automobile cables), or for petrochemical installations.

The Commission's investigation has however shown that these markets are fragmented with numerous other smaller suppliers. Prysmian will therefore continue to face a sufficient number of credible competitors for optical fibre cables and general wiring (including for each of the various sub-applications where Prysmian and Draka currently overlap).

The Commission also examined the transaction's impact in the upstream market for the supply of optical fibre, which they both make and is used as an input for the manufacturing of optical fibre cable. Draka also supplies optical fibre to optical fibre cable manufacturers. However, the investigation showed that competing optical fibre cable suppliers will continue to have access to sufficient sources of optical fibre worldwide. Moreover, many suppliers of optical fibre cables are vertically-integrated and produce their own optical fibre.

The Commission, therefore, concluded that the transaction would not significantly reduce competition in all or part of the European Economic Area (EEA).

Merger control rules and procedures

The Commission, in 1989, was given the power to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Art 1 of the Merger Regulation). The Commission clears the vast majority of mergers without conditions and only accepts remedies or prohibits mergers when the notified transaction would lead to a significant impediment to competition and make consumers worse off. The EU merger rules therefore allow competitive companies to grow into European or global players.

From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).

EU merger clearance does not prejudge the result of other possible probes under State aid or antitrust rules.

More information on the case is available at:

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_6092


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