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European Commission - Press release

Mergers: Commission approves aerospace and defence joint venture between Airbus and Safran, subject to conditions

Brussels, 26 November 2014

The European Commission has concluded that the proposed creation of a joint venture for space launchers, satellite subsystems and missile propulsion between Airbus Group N.V. of The Netherlands and Safran S.A. of France is in line with the EU Merger Regulation. Both Airbus and Safran are active in the aerospace and defence industries. The decision is conditional upon the exclusion of Safran's activities in electric satellite thrusters from the joint venture, as well as on certain supply assurance commitments. The Commission had concerns that the joint venture could have shut out Airbus' competitors or limited their access to certain supplies, as well as transmitted strategic information to Airbus. The commitments offered by Airbus and Safran address these concerns.  

On 8 October 2014, Airbus and Safran notified plans to create a joint venture to which they would contribute their respective activities in space launchers, satellite subsystems and missile propulsion. In addition, Airbus and Safran intend to acquire, at a later stage, control over the satellite launch operator Arianespace. However, this would be a separate transaction and today's decision neither takes it into account nor prejudges the possible assessment of such a transaction in the future.

The Commission examined the competitive effects of the proposed transaction and concluded that, as initially notified, it risked to significantly reduce competition in the supply of satellites and space vehicles. Indeed, the joint venture would have the incentive to shut out Airbus' competitors or limit their access to a number of important components, namely: (i) hall-effect electric satellite thrusters, (ii) carbon-carbon cylinders for optical satellites, (iii) standard accuracy pressure transducers (SAPTs) for satellites and (iv) thermal protection systems for civil re-entry bodies. As regards hall-effect thrusters, the Commission's concerns were that the transaction might have significantly reduced competitors' customer base since Airbus, the most important satellite manufacturer in Europe, would have the incentive to buy exclusively from the joint venture. Finally, the transaction might have led to exchanges of confidential information regarding satellites and satellite components between the joint venture and Airbus to the detriment of competitors. The Commission found no risk of anticompetitive effects in the markets for space launchers and missile propulsion.

To dispel the Commission's competition concerns, Airbus and Safran committed to exclude Safran's activities in electric satellite propulsion from the joint venture as well as to maintain this business separated. Airbus and Safran also committed to conclude a framework supply agreement with Safran's current main customer for (i) carbon-carbon cylinders for optical instruments for space applications, (ii) thermal protection systems for civil re-entry bodies and (iii) SAPT, as well as to guarantee the supply of these components to any third party prime contractor on transparent and non-discriminatory terms.

These commitments address the competition concerns identified by the Commission. The Commission therefore concluded that the proposed transaction, as modified by the commitments, would not raise competition concerns. The decision is conditional upon full compliance with these commitments.

Companies and products

Airbus is active in aeronautics, space and defence. Its activities include the design, manufacture and worldwide sale of civil space launchers, launcher subsystems and equipment, satellites, satellite subsystems and equipment. Airbus is also active in the field of strategic and tactical missiles.

Safran is active in aerospace propulsion, aircraft equipment, defence and security. Its activities include the production of liquid rocket and solid rocket motor propulsion systems for launchers and electric propulsion systems for satellites. Safran is also active in the field of strategic and tactical propulsion for missiles.

Merger control rules and procedures

The Commission has the duty to assess mergers and acquisitions involvingcompanies 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 will be available on the competition website, in the Commission's public case register under the case number M.7353.


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