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- Article 85
- Sector : regional aircraft
- ATR   (F)  and   its  parent   companies   Aérospatiale  (F)   and  Alenia
  (Finmeccanica) (I) / BAe (UK).

The Commission has authorised  the joint venture between Aérospatiale, Alenia
and British  Aerospace in the  sector of regional  aircraft for a  transition
period of 5 years.  In  fact  the Commission has sent a comfort letter, which
outlines that the  Commission is of the opinion  that competition within this
sector would not be seriously reduced or eliminated by this joint venture.

Last month,  the Commission decided that  the operation in question  does not
constitute a concentration under the Merger Regulation (IP/95/849).

The final objective  of this  project is  the concentration  of the  parties'
activities in  the regional aircraft sector.  At the  moment these activities
include the products of ATR (turboprop  jets ATR 42 and 72) as  well as those
of BAe (turboprops Jetstream and regional jets Avro and BAe).

During  the  first  stage  of  the  cooperation  the  parties will  pool  and
rationalise  customer service  resources such as  marketing, sales and after-
sales  service.   Moreover,  they will  create  a single  integrated training
centre in  Naples for pilots and  will jointly  undertake feasibility studies
for  new  aircrafts in  the sector.  The  joint venture  will  also undertake
research and  development activities. It is this  first stage with a duration
of five years to which the Commission's decision refers.

In the  Commission's analysis, the present  situation in  the relevant market
was an essential factor.

The market

The  market  for regional  aircraft  has a  worldwide  dimension.   The  main
manufacturers operate in all continents.  
A distinction should be made between jet and turboprop aircraft.
In its  1991 "de  Havilland"  decision the  Commission distinguished  between
three segments within  turboprop aircraft according to their seating capacity
(20 to 39 seats; 40 to 59 seats; 60+ seats).

In  the regional aircraft  market for  jets (up  to 125 seats)  a distinction
between segments has not been made.

The Commission has  based its comfort letter on  the same distinction and has
taken into  account the  observations of  third parties,  including those  of
competitors of the parties and Member States.

While  one cannot  speak  of  a high  level  of substitutability  as  between
turboprop  aircraft  and  jet aircraft  because  of  substantially  differing
operating costs, nevertheless  a certain evolution  in the  market should  be
noted. In particular,  if an aircraft with a  capacity of more than  60 seats
is  required  to cover  relatively  long  distances, purchasers,  mindful  of
passenger  comfort,  will  be  inclined to  purchase  a  jet  rather  than  a
turboprop aircraft.

Market share

Through the  creation of  the joint venture,  the number  of competitors  who
offer a  product in this sector  will be reduced,  but the market share  will
not increase in such  a way to distort the existing structure.  Following the
cooperation between  the first and the  sixth placed  competitors, the number
of competitors has been reduced from 7 to 6.

1)   In the  market for regional jets  ATR does not operate  and BAe occupies
     approximately 24 %.  The  main competitors are Boeing (34 %)  and Fokker
     (31 %).
2)   In  the segments of  the turboprop aircraft  market the situation  is as
     follows :

  -  20 to 39 seats :
     BAe holds 8 % (Jetstream J41); 
     ATR does not operate;
     the main  competitors  are  Saab 340  (33 %),  Embraer 120  (28  %),  de
     Havilland Dash 8-100/200 (24 %), and Dasa-Dornier 328 (6 %);

  -  40 to 59 seats :
     BAe does not operate;
     ATR holds 43 % (ATR 42);
     the  main competitors  are Fokker  F50 (27 %),  de Havilland  Dash 8-300
     (17 %), Casa-IPTN (8 %) and Saab 2000 (6 %);

  -  60+ seats :
     BAe stopped production of its J61 aircraft at the beginning  of 1995 and
     the only  model offered in this segment is the ATR 72 (100 %); it should
     be noted,  however, that  this segment  only  accounts for  10 % of  the
     overall  market  for  turboprop  aircraft  and  that  new  entrants  are

Therefore, the  operation leads neither to a cumulation of high market shares
in the sector as a whole nor in its segments.

The joint venture  does not create a dominant  group being the sole operators
present in all market segments.  At least  one competitor (de Havilland) also
offers a wider  range of  turboprop aircraft and  is preparing  to enter  the
market for regional jets.

For  these reasons  the Commission  has authorised  the  joint venture  for a
period of  five years,   reserving the  right to reconsider  the case  if the
merger project does not materialise.


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