The Commission's competition concerns
The Commission assessed the impact of the proposed transaction on a number of markets where the activities of FTE and Valeo overlap, in particular in the supply of passive hydraulic actuatormodules and its individual components. Passive hydraulic actuators are essential components in vehicles' clutch systems.
The Commission's investigation confirmed that the proposed transaction, as originally notified, raised competition concerns in the markets for the supply of:
- passive hydraulic actuator modules and components for light vehicles to original equipment manufacturers in the European Economic Area (EEA); and
- concentric slave cylinders for light vehicles in the independent spare part market in Croatia, Greece, Hungary, Latvia, Slovenia and the UK.
The competition concerns are due to several factors, including the very high market shares for the merged entity in these markets, the difficulties for customers to switch to other suppliers and the lack of sufficient buyer power to offset the merged entity's market power post-transaction.
To address the Commission's concerns, Valeo has offered to divest its entire passive hydraulic actuator business with the exception of its Korean activities. More specifically, the divestment consists of the following Valeo assets:
- the business of development, production and supply of passive hydraulic actuators in Mondovì, Italy;
- the manufacturing plant in Gemlik, Turkey;
- the business of production and supply of passive hydraulic actuators in China;
- assets for the production and supply of passive hydraulic actuators in India.
Valeo has proposed the Italian car part supplier Raicam as a purchaser for the divested assets. Raicam is an established supplier with a strong presence in Italy and operations in the EEA as well as in several other countries.
The Commission found that the proposed remedies address its concerns given that they would ensure that the number of suppliers in the markets affected would remain the same. This will ensure that original equipment manufacturers and independent spare part customers will face a similar competitive environment following the transaction.
The Commission therefore concluded that the proposed transaction, as modified by the commitments, would no longer raise competition concerns. The decision is conditional upon full compliance with the commitments.
Today's decision also approves Raicam as the buyer of the assets divested by Valeo.
Companies and products
Valeo, based in France is active in the design, manufacture and sale of automotive equipment including thermal systems, comfort and driving assistance systems, and visibility systems.
FTE, based in Germany is active in the design, manufacture and sale of (i) clutch actuation products; (ii) brake actuation products; (iii) electric transmission oil pumps and other components for gearboxes and powertrains based on electro-hydraulic technology.
Merger control rules and procedure
The transaction was notified to the European Commission on 7 September 2017. It was originally notified to the Commission on 10 October 2016 but the notifying party withdrew the notification on 29 November 2016.
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 under the case number M.8102 in the Commission's public case registry on the competition website once any confidentiality issues have been resolved. A periodic compilation of merger news is available in the Competition Weekly News Summary.