Brussels, 2 July 2013
Mergers: Commission clears acquisition of Italian aviation equipment company Avio by GE, subject to conditions
The European Commission has cleared under the EU Merger Regulation the proposed acquisition of the aviation business of Avio S.p.A. of Italy by General Electric Company (GE) of the United States. The decision is conditional upon a series of commitments aimed at safeguarding the competitive position of the Eurojet consortium. Eurojet manufactures the engine for the Eurofighter, a combat aircraft used by Italy, Germany, the United Kingdom, Spain and Austria and competing with GE-powered aircraft. The Commission had concerns that the transaction, as originally notified, would have enabled GE to obtain significant influence in the Eurojet consortium and access strategic information of its competitors. The commitments submitted by GE adequately address these concerns.
Avio, together with Rolls-Royce of the United Kingdom, MTU of Germany and ITP of Spain, is a member of the Eurojet consortium which designs and manufactures the Eurofighter Typhoon's EJ200 engine. Avio is a key supplier to this programme and, by extension, to the Eurofighter project which competes with other combat aircraft powered by GE engines for sales in export markets.
The Commission's investigation showed that the transaction, as initially notified, would have allowed GE to acquire a significant degree of influence in the Eurojet consortium and access strategic information of one of its main competitors in the international market for fighter aircraft. GE would therefore have been in a position to prevent the Eurofighter from offering an alternative to GE-powered platforms.
In order to dispel the Commission's concerns, GE offered a series of commitments which will ensure that the Eurojet consortium's strategic information is properly protected and that Eurojet and Eurofighter can continue to participate in future campaigns for export sales. Whilst the commitments eliminate the conflict of interest created by the merger, Avio will continue to fulfil its share of the consortium's production based on Italy's contribution to this important European military programme.
The Commission therefore concluded that the transaction, as modified by these commitments, would no longer raise competition concerns. The decision is conditional upon full compliance with the commitments.
The Commission also investigated the markets for some key components sold by Avio to GE's competitors in aircraft engine markets, such as Pratt & Whitney, part of United Technologies Corp., and Rolls-Royce. The Commission concluded that the proposed acquisition would not raise competition concerns in these markets. This conclusion takes account of recently signed agreements, between GE and Pratt & Whitney on the one hand, and between GE and Rolls-Royce on the other hand, aimed at ensuring that Avio will remain a reliable source of supply for these aircraft engine manufacturers.
The Commission worked in close cooperation with its counterparts from the US Federal Trade Commission (FTC).
The transaction was notified to the Commission on 13 May 2013.
Companies and products
GE is a global, diversified manufacturing, technology and services company. GE is made up of eight business units. GE Aviation, the business unit involved in the proposed concentration, manufactures commercial and military jet engines and components, turbo propellers and turbo shafts, as well as avionics and mechanical systems for aircrafts.
Avio is a global aerospace manufacturer and service provider active in jet engine modules, maintenance repair and overhaul, control and automation systems, and electrical systems. Avio's assets and operations relating to its space business are not part of the transaction.
Merger control rules and procedures
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. 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).
More information on the case is available at: