Brussels, 3rd August 2007
The European Commission has approved, under the EU Merger Regulation, the proposed acquisition of the Italian company Eco by the Finnish group Luvata. Both companies are major suppliers of heat exchangers. The Commission's decision is conditional upon the divestiture of one of Luvata's plants in Europe. In light of these commitments, the Commission has concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.
Competition Commissioner Neelie Kroes said "In view of the remedies offered, I am satisfied that competition will remain vigorous after the merger and manufacturers of air conditioning and refrigeration systems will continue to benefit from competitive prices."
Luvata is a company active in metal fabrication, component manufacturing and related engineering and design services with a focus on copper and copper alloy products used for heat transfer, electrical and electronics conductivity, signal transmission and corrosion resistance.
Eco is an Italian manufacturer of heat exchange products such as coils. It is currently the property of the private equity fund Compass.
The Commission examined the competitive effects of the proposed merger in the coil markets, where both companies are active as suppliers. Coils are systems which enable the transfer of heat from one fluid or gas to another without mixing the two. They are in particular used in air-conditioning (HVAC) and refrigeration systems and represent up to 40% of the total cost of these systems.
The Commission's market investigation revealed that the proposed acquisition, as initially notified, could significantly reduce competition as regards the supply of coils to manufacturers of condensing units, a component of refrigeration systems. Indeed, the Commission found that Eco and Luvata are the number one and number two of the market at the European level and the next competitor has a very different market positioning. In addition, the market investigation pointed toward possible competition concerns on the market for coils used in HVAC.
To address the Commission's serious doubts as to the compatibility of the
proposed transaction with the Single Market, Luvata committed to divest the
plant where coils for condensing units and most coils for HVAC are manufactured.
After market testing these undertakings, the Commission concluded that the
commitments were suitable to remedy the serious doubts.