EUROPEAN COMMISSION DG Competition

Only the English text is available and authentic.

REGULATION (EC) No 139/2004 MERGER PROCEDURE

Article 6(1)(b) NON-OPPOSITION Date: 26/07/2021

In electronic form on the EUR-Lex website under document number 32021M10231

EUROPEAN COMMISSION

Brussels, 26.7.2021 C(2021) 5654 final

PUBLIC VERSION

AerCap Holdings N.V. 65 St. Stephen’s Green D02 YX20 – Dublin Ireland

Dear Sir or Madam,

(1) On 18 June 2021, the European Commission received notification of a proposed concentration (the “Transaction”) pursuant to Article 4 of the Merger Regulation by which AerCap Holdings N.V. ("AerCap", The Netherlands) acquires within the meaning of Article 3(1)(b) of the Merger Regulation sole control of the whole of GE Capital Aviation Services ("GECAS", US), belonging to General Electric Company (“GE”, US) and, within the meaning of Articles 3(1)(b) and 3(4) of the Merger Regulation, joint control together with Safran Aircraft Engines (“Safran”, France) over Shannon Engine Support Limited ("SES", Ireland), currently jointly controlled by GE and Safran. The concentration is accomplished by way of purchase of shares 3and assets.

 Handling instructions for SENSITIVE information are given at https://europa.eu/!db43PX.

1OJ L 24, 29.1.2004, p. 1 (the “Merger Regulation”). With effect from 1 December 2009, the Treaty on the Functioning of the European Union (“TFEU”) has introduced certain changes, such as the replacement of “Community” by “Union” and “common market” by ‘internal market’. The terminology of the TFEU will be used throughout this decision.

2OJ L 1, 3.1.1994, p. 3 (the “EEA Agreement”).

3Publication in the Official Journal of the European Union No C 251, 28.6.2021, p. 28.

Commission européenne, DG COMP MERGER REGISTRY , 1049 Bruxelles, BELGIQUE Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË

Tel: +32 229-91111. Fax: +32 229-64301. E-mail: COMP-MERGER-REGISTRY@ec.europa.eu.

1. THE PARTIES

(2) AerCap's primary business is the leasing of commercial aircraft, which it carries out on a worldwide basis. AerCap has its global headquarters in Dublin, Ireland.

(3) GECAS is active in the commercial aircraft leasing and financial industry, offering a broad array of leasing and financing products and services for commercial aircraft, turboprops, aircraft engines, helicopters and materials. GECAS is headquartered in the United States and is currently part of the group ultimately owned by GE.

(4) SES is a subsidiary of CFM International (“CFMI”), a jointly controlled 50/50 full 4 functionjoint venture between GE and Safran. SES is active in aircraft engine leasing.

(5) AerCap, GECAS and SES are hereinafter referred to as the “Parties”.

2. THE OPERATION AND CONCENTRATION

(6) On 9 March 2021, AerCap entered into a Transaction Agreement with GE pursuant to which AerCap will acquire sole control over the GECAS business and joint control over SES, with Safran being the other jointly controlling parent company. Hereinafter, AerCap as it will emerge post-Transaction is referred to as the “Merged Entity”.

(7) As part of the Transaction, GE will also acquire approximately 46% of the Merged Entity’s shareholding and will be entitled to nominate two directors of its Board of 5 Directors (the “Board”)and to appoint one of those GE directors to the Nomination 6 and Compensation Committee of the Board.However, this stake will not grant GE joint control over AerCap.

(8) This is because under the Shareholders’ Agreement (“SHA”) GE has agreed to a restriction of its ability to vote, such that GE may only vote shares constituting up to 7 24.9% of the total AerCap shares eligible to vote.Taking into account the attendance and voting levels at AerCap's annual general meetings over the last four years, GE would not be highly likely to achieve a majority at the shareholders’ 8annual general meetings of AerCap. .

(9) Moreover, under the SHA, GE’s right to nominate two out of the eleven directors of AerCap’s Board (at most) and to have one of those GE directors appointed to the Nomination and Compensation Committee of the Board, will not enable GE to veto

4SES has being operating continuously since its establishment in 1988 with its own resources and assets, staff and dedicated management. It has its own presence on the market and conducts its relationship with its parents companies at arm’s length.

5So long as GE collectively owns at least 10% of AerCap’s outstanding ordinary shares.

6So long as GE collectively owns any of AerCap’s outstanding ordinary shares.

7GE is only permitted to vote the entire stake in minority shareholder protection matters.

8Consolidated Jurisdictional Notice, recital 59.

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any strategic decisions of the Board (e.g. approval of budget, business plan or 9appointment of senior management).

10 (10) As part of the Transaction, AerCap will also acquire joint control over SES.SES is currently a subsidiary of CFMI, a jointly controlled 50/50 joint venture between GE and Safran. CFMI is active in the design, manufacture, marketing, maintenance, repair and overhaul (“MRO”) support of aircraft engines. This acquisition is 11 envisaged under two possible scenarios.Irrespective of the structure ultimately adopted, AerCap will acquire joint control over SES as a result of the Transaction.

(11) According to the Parties, the rationale for the Transaction is to create a diversified aviation lessor with positions across aircraft, engine and helicopter leasing, and related activities, which will be a strategic partner to customers globally. AerCap expects that the combination with GECAS’ complementary business and the resulting increase in the diversity of the aircraft portfolio will enable the Merged Entity to provide high-quality services benefiting existing and new customers.

(12) In light of the above, the Transaction constitutes a concentration within the meaning of Article 3(1)(b) of the Merger Regulation and of Articles 3(1)(b) and 3(4) of the Merger Regulation respectively, as far as the acquisition of sole control over GECAS and of joint control over SES are concerned.

3. UNION DIMENSION

(13) The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 000 million (AerCap: EUR 3 789 million, GECAS: EUR 3 460 12 million, SES: EUR […]).Each of at least two of the undertaking concerned has an aggregate Union-wide turnover in excess of EUR 250 million (AerCap: […] million, GECAS: […] million). Not all of the undertaking concerned achieve each more than two-thirds of their aggregate Union-wide turnover within one and the same Member State.

(14) The notified operation therefore has a Union dimension pursuant to Art. 1(2) of the Merger Regulation.

9Each director has the right to cast one vote, all resolutions shall be passed by an absolute majority of the votes cast and the Board can only pass resolutions when a quorum of four directors are present. It follows that the presence of GE directors in the AerCap Board would not be required in order to reach a quorum, and the two directors designated by GE could not pass any resolutions by themselves.

10The acquisitions of GECAS and of SES are linked by conditionality. As a result, the two transactions are considered as a single concentration […].

11Under one scenario, […]. Under the other scenario, […].

12Turnover calculated in accordance with Article 5 of the Merger Regulation.

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4. ASSESSMENT

4.1. No horizontal concerns with respect to aircraft leasing

4.1.1. Market definition

4.1.1.1. Relevant product market

(15) Aircraft are expensive assets. According to the Parties, the average list price of a narrow body aircraft (i.e. one aisle, 100-200 passengers) is USD 100-110 million while the price of a wide body aircraft (i.e. two isles, 200-400 passengers) is USD 13 300-320 million.Considering the cost involved, airlines often require financial solutions in order to source aircraft. Such solutions may be in the form of loans from creditors, funding from capital markets or different types of leasing.

(16) The Parties argue that aircraft leasing is in essence one type of financial solution for airlines to acquire aircraft and as such belongs to a market that encompasses all types 14of aircraft financing solutions.

(17) In previous decisions, the Commission considered two distinct markets for aircraft 15leasing:

(a)Wet leasing: by which the aircraft is leased with its crew, maintenance and 16insurance. These are typically short term transactions between two airlines. The Parties are not active in wet leasing.

(b)17 (b) Dry or operational leasing: by which only the aircraft is leased.Around 1841% of the total worldwide number of commercial aircraft is on dry leases. 19The Parties overlap in dry leasing.

(18) The Commission also considered a segmentation of dry leasing according to aircraft size: wide-body (200-400 seats), narrow-body (100-200 seats) and regional aircraft,

which can be sub-divided further to aircraft of 30-50 seats and aircraft of 70-90 20seats.

(19) The market investigation in this case suggested that dry leasing may be further 21 segmented according to types of lease.Thus, sale and lease back (“SLB”) is a lease by which an airline is selling to a lessor an aircraft it already has in its fleet or an aircraft it has on order from an aircraft manufacturer (“airframer”) and immediately leases it back from the lessor. In the second type of dry leasing, the lessor is the original owner of the aircraft (for example because it ordered it directly from an airframer). This latter type of leasing is referred to as “direct”, “speculative” or 22“placement” leasing.

(20) According to market participants, SLB and direct leasing are different services from 23 the demand side. SLB’s serve financial needs of airlines; airlines would rely on SLB leasing when they own the aircraft but are looking for more liquidity or to cut capital expenses. Direct leasing serve operational needs: airlines would rely on direct leasing when they need more aircraft but cannot purchase them themselves, for 24 example because the time to order them directly from airfarmes is too longor when 25they cannot order them directly from the airframers.

(21) From the supply side, direct leasing represents higher risk for lessors compared to SLBs because, unlike with SLBs, with direct leasing the lessor bears the risk of 26 finding a lessee for the aircraft. In addition, ordering aircraft directly from airframers is highly complicated and requires very specific expertise that only a minority of lessors have.While more than 150 lessors are active in SLB, only 28about 15-20 are regularly active in direct dry leasing.

(22) Rates to be paid for SLBs and direct leases are also different. While the rate of SLB is primarily based on the price of the aircraft paid by the airline offering it for SLB,

the rates of direct leases are based on the balance of demand and supply for the 29aircraft at the time it is leased.

(23) In accordance with the Commission practice mentioned above, a further segmentation by type of aircraft should be considered also with respect to the two types of dry leasing. Another possible distinction is between passenger and non- passenger (or cargo) aircraft that serve different demand needs.

(24) Specifically in relation to direct dry leasing, market participants explained that direct leasing of wide body aircraft represent a higher risk to lessors compared to leasing of narrow body aircraft. Wide body aircraft are three times more expensive than narrow body aircraft and demand for them is much smaller than for narrow body aircraft. Consequently, it is more difficult for lessors to find a lessee for wide body aircraft. Another significant difficulty, when the lessor seeks to replace a lessee, is re- branding. When an aircraft changes from one airline to another, it has to be re-fitted in order to comply with the branding of the new airline. Wide body aircraft are more expensive to re-brand not only because they are bigger but also because airlines invest significantly more in branding their premium classes that are usually served by wide body aircraft, an investment that is not typically made in narrow body aircraft. Consequently, out of about 15-20 lessors regularly active in direct dry leasing, only about five to ten are considered to be regularly active in the dry leasing 30of wide body aircraft.

(25) On the basis of the above, the Commission concludes that there is a separate market for dry leasing. It can be left open whether the market for dry leasing should be further segmented between type of leasing or type of aircraft, as the Transaction does not raise competition concerns under any plausible market definition.

4.1.1.2. Relevant geographic market

(26) In previous decisions, the Commission considered the geographic scope of the 31 market for aircraft dry leasing to be worldwide.The Parties agree with the 32 Commission’s approach.The market participants also confirmed this approach in 33the market investigation in this case.

29Minutes of a call with an airline, paragraph 8 [ID54]; minutes of a call with a lessor, paragraph 4 [ID328].

30Minutes of a call with an airframer, paragraph 2 [ID358]; minutes of a call with an industry association, paragraph 7 [ID360]; minutes of a call with a lessor, paragraph 5, [ID360]; minutes of a call with an airframer, paragraph 5 [ID304]; minutes of a call with a lessor, paragraph 6 [ID328]; minutes of a call with a lessor, paragraph 11 [ID154]; questionnaire to customers, responses to question 6.

31Case M.9287 - CONNECT AIRWAYS / FLYBE, paragraph 221; COMP M.9062 FORTRESS INVESTMENT GROUP /AIR INVESTMENT VALENCIA / JV, paragraph2 46-48.

32Form CO, paragraph 6.87 et seq.

33Questionnaire to competitors, responses to question 7; Questionnaire to customers, responses to question s 7 and 8; minutes of a call with a lessor, paragraph 4 [ID154]; minutes of a call with a lessor, paragraph 8 [ID360]; minutes of a call with an industry association, paragraph 8 [ID360]; minutes of a call with an airline, paragraph 10 [ID54].

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45 number of recent entries.Chinese lessors, in particular some who are part of major 46 financial institutions,were growing fast in recent years and gaining market 47 48shares.Overall, the leasing industry has become more fragmented in past years. 49 In fact, since 2013the number of aircraft in each of the Parties’ fleets has been constantly decreasing (AerCap -22%, GECAS -39%) while the overall aircraft 50 leasing industry was growing.Consequently, as also shown by Tables 1 and 2 above, the Parties’ shares have been decreasing in the overall market for dry leasing and in the wide body segment.

(35) Although the Transaction will create the largest lessor worldwide, the market investigation did not provide a clear indication that the Merged Entity would obtain an additional significant advantage over its competitors. While some of the market participants considered that the size of the Merged Entity would give it an advantage over its competitors, others opined that once a certain fleet size is achieved (about 300 aircraft) there is little advantage to additional size and there may even be 51 disadvantages.Market participants therefore expect that post-Transaction the Merged Entity would rationalise and decrease its combined fleet as AerCap did after 52the purchase of ILFC.

(36) Market participants also point out that there are several strong lessors with sufficiently large fleets that will remain in the market post-Transaction; in addition to the Parties there are at least nine lessors with fleets larger than 300 aircraft across 53 all aircraft types, including wide body aircraft.Market participants also did not identify the Parties as closer competitors to each other than other lessors. They noted

45Form CO, paragraphs 7.11 et seq and 8.43 et seq; minutes of a call with a lessor, paragraph 14 [ID154]; minutes of a call with an airline, paragraph 11 [ID54]; Minutes of call with an airframer, paragraph 12 [ID358].

46Among the top-12 lessors worldwide, four belong to the following Chinese banks: Industrial and Commercial Bank of China, Bank of China, Bank of communications and China Development Bank. Form CO, page 162 (annex 7).

47Parties’ internal document, document 5.4.(iii) – 22 – 3Q'20 Operating Review, slide 5; Minutes of call with an airframer, paragraph 8 [ID358]; Minutes of call with a lessor, paragraph 10 [ID332].

48From CO, page 174 (annex 7.10), paragraph 7.15 et seq; Minutes of call with a lessor, paragraph 13 [ID332]; Minutes of call with an airframer, paragraph 4 [ID304]; minutes of a call with an airline, paragraph 11 [ID54].

49In 2013, AerCap purchased from AIG its leasing aircraft company ILFC that was at the time, together with GECAS, one of the two largest aircraft lessors worldwide.

50From CO, page 174 (annex 7.10), paragraph 7.15 et seq.

51OEMs and airlines prefer spreading their exposure to lessors and may therefore prefer working less with AerCap post-Transaction. In addition, very large fleets, especially those created as a result of merging two previously independent portfolios, may represent imbalances in exposure to risk (e.g. too many aircraft of the same type or leased to the same customers). Moreover, keeping a large fleet on the books pla ces high burden of depreciation. Minutes of call with an airframer, paragraph 11 [ID358]; minutes of a call with a lessor, paragraphs 12-13 [ID154]; minutes of a call with an airline, paragraph 13 [ID54]; minutes of a call with a lessor, paragraph 14 [ID332]; minutes of a call with a lessor, paragraph 19 [ID332]; minutes of call with an airframer, paragraph 7 [ID304]; minutes of call with engine manufacturer, paragraph 11 [ID315]; questionnaire to customers, response to question 13, 13.2 and 14; questionnaire to competitors, responses to questions 12, 12.2, 15.1 and 15.2.

52Minutes of a call with a lessor, paragraph 18-19 [ID332]; minutes of a call with a lessor, paragraph 9 [ID328]; minutes of a call with an airline, paragraph 13 [ID 54].

53[…] Form CO, page 174 (annex 7.10). See also minutes of a call with an airline, paragraph 13 [ID54].

that at least the other major lessors as close competitors (even if significantly smaller 54 by size).Some market participants explained that, in their view, all lessors active in 55 a specific aircraft leasing segment compete with each otherand would be 56 considered by airlines.Indeed, airlines typically work with a large number of 57 lessors.Airlines prefer working with several lessors also in order to manage their 58exposure to them.

(37) Furthermore, the market investigation was inconclusive as to whether the Merged Entity will obtain post-Transaction a stronger position vis-à-vis the airframers that may give it an advantage compared to other lessors. While some market participants considered that this may be the case, others opined that the Merged Entity would not acquire such advantage because airframers have other large customers and also 59prefer to manage their exposure to customers.

(38) In addition, with respect to the market for direct leasing of wide body aircraft specifically, the smaller number of lessors for direct wide aircraft compared to the number of lessors for narrow body aircraft can be primarily explained by the 60 significantly smaller size of the market.Nevertheless, in the years 2018-2020 there were seven lessors that, in addition to the Parties, were regularly (that is, every year) 61 active in the market, offering wide body aircraft for direct lease.In addition, there are other large lessors that have experience in this market and may re-enter if 62 conditions are favourable.Currently for example, four lessors that were not regularly active in this market in the past three years have orders with airframers for 63 wide body aircraft. In addition, market participants explained that direct leasing is less important with respect to wide body aircraft. First, wide body aircraft are typically operated by the larger airlines that are able to order directly from the airframers. Second, airframers have more capacity to take orders for wide body aircraft (because demand is lower) and the lag time for delivery is shorter (18-24

months) than for narrow body. Consequently, airlines can order more easily wide 64body aircraft directly from the airframers and are less dependent on lessors.

(39) In view of these considerations, the large majority of market participants responding to the market investigation were of the view that the Transaction does not give rise to 65competition concerns.

(40) The Commission therefore considers that the Transaction is unlikely to raise serious competition concerns with respect to dry aircraft leasing and all its plausible segments.

4.2. No concerns regarding conglomerate effects: aircraft leasing and engine leasing

(41)Through the Transaction, AerCap will purchase the aircraft engine leasing business of GE, that is, the activities of GECAS and SES in this sector. Engine leasing provides airlines with spare engines. In order to ensure undisrupted operation of their aircraft fleet, airlines have a certain number of spare engines available to replace engines that require MRO services. Engines typically require a first overhaul after 66 approximately 7 to 10 years and, thereafter, every six years on average.Airlines may purchase spare engines or lease them from engine lessors. Spare engines 67 represent about 10% of aircraft engines worldwideand less than half of spare 68engines are leased.

(42)According to the estimates of the Parties, GE’s engine leasing business represents 69 about [20-30]% of leased engines worldwide. It has an intra-group focus; the majority of the engines owned by GECAS and all engines owned by SES are GE and CFMI manufactured engines. GECAS and SES also lease back the majority of their 70engines to GE and CFMI for their product support services.

(43)Other engine manufacturers also have engine leasing arms, for example Rolls Royce and Pratt & Whitney, which, according to the estimates of the Parties, represent [10-20]% and [10-20]% of leased engines respectively. The Parties estimate that other large engine lessors are Engine Lease Finance ([10-20]%), Willis Lease ([10- 7120]%) and Fortress ([5-10]%).

There is a large number of additional dedicated engine lessors, aircraft/engine mixed 72lessors and airline/MRO lessors.

(44)The Parties explained that AerCap does not operate any dedicated aircraft engine leasing business. It has occasionally leased out a negligible number of engines that it 73 has taken off its old aircraft.Currently, AerCap has only [0-5] engines on lease in a 74 market estimated by the Parties at around 3 000 engines.Consequently, the Transaction does not give rise to horizontal competition concerns in aircraft engine leasing.

(45)Aircraft lessors are typically not (although occasionally could be) customers of 75 engine leasing services.The customers of engine leasing services are mostly 76 airlines and providers of aircraft engine maintenance services.In view of this, there is also no vertical foreclosure concern. However, a hypothetical concern could be that the Merged Entity, could bundle or tie engine leasing services to aircraft leasing 77 services thus excluding other engine lessors.The Parties confirmed that in the past GECAS did not bundle or tie aircraft and engine leasing and the Merged Entity will not be able to do so post-Transaction. The Parties explain that airlines do not lease engines when leasing an aircraft. First, because as explained above, the aircraft would require engine maintenance only after at least six years. Second, airlines typically have a pool of spare engines (owned or leased) that serves their fleet and do 78not link leases for specific engines with leases for specific aircraft.

(46)The market investigation did not indicate that the Transaction is likely to give rise to serious concerns of conglomerate effects. While a small number of respondents did mention that the Transaction could strengthen the position of the Merged Entity in engine leasing, others opined that the Transaction would not affect competition in that respect. Overall, the large majority of respondents did not raise possible 79concerns with respect to engine leasing.

(47)As a result of the Transaction, there will be a link, via GE’s minority shareholding in AerCap, between GE’s activity in engine manufacturing and the Merged Entity’s activity in aircraft leasing, as well as a link between GE’s activity in engine

manufacturing and the Merged Entity’s activity, through GECAS and SES, in engine leasing. However, these links will not give rise to vertical competition concerns.

(48)As illustrated in Section 2 of this Decision, GE will not acquire control over the Merged Entity as a result of the Transaction, in spite of it holding a significant minority shareholding in the Merged Entity post-Transaction. GE’s rationale in the Transaction appears to be linked to the possibility of monetising its participation in the Merged Entity over time. Evidence of this has been found in the Parties’ internal 80 documents,where clear reference is made to the prospect for GE of obtaining incremental proceeds by fully exiting over time. Accordingly, as the sector recovers, GE plans to exit the Merged Entity’s shareholding through a public market sell 81 down.Some respondents to the market investigation have shown to have the same understanding of the rationale of GE’s participation in AerCap as they have indicated that they expect GE to reduce its participation in AerCap in several years’ 82time.

(49)As regards the link between GE’s activity in engine manufacturing and the Merged Entity’s activity in aircraft leasing, the Commission considers it unlikely that the Merged Entity would engage in any input or customer foreclosure strategy.

(50)As regards input foreclosure, even if GE had the ability to foreclose lessors competing with the Merged Entity by withholding supplies of aircraft engines from aircraft airframers, it would lack the incentive to pursue such a strategy, as its interest is to sell as many of its engines as possible. As the Merged Entity would not be able to absorb all the demand for GE-powered aircraft, GE would only stand to lose sales of engines if it were to pursue such a strategy. In line with this, the market investigation has provided no indication that GE’s minority shareholding in the Merged Entity might raise concerns.

(51)Some respondents pointed to the possibility that GE might favour the Merged Entity, 83by for instance granting greater discounts on GE engines than other lessors. However, the majority of the respondents who have expressed a view have raised no 84 concern,with some confirming that, as a result of the Transaction, the Merged 85Entity will have a mixed portfolio of aircraft with different engines.

(52)As regards customer foreclosure, by lacking control over the Merged Entity, GE would lack the ability of foreclosing competing engine manufacturers by favouring, via the Merged Entity, GE engines through orders placed with airframers. This lack of ability can also be explained by the fact that typically airframers and airlines, not

lessors, drive engine purchases’ choices. Airframers decide which engine to certify on an aircraft platform based on their preferences and what they anticipate airlines’ demand for new aircraft will be. If airframers certify more than one engine, then 86 airlines choose which engine they want on their aircraft.This was confirmed by the 87market investigation.

(53)Moreover, even if it had the ability to favour GE’s engines by placing orders for GE-powered aircraft with airframers, the Merged Entity would lack the incentive to do so. Lessors order aircraft that they expect they will be able to lease to airlines. Their interest is to satisfy airlines’ demand for the combinations of aircraft and engines that airlines desire. The Merged Entity’s interest will therefore be to have a mixed portfolio of aircraft powered by different engines so as to be able to address that demand. Moreover, the Merged Entity’s shareholders other than GE would have no interest in favouring orders for GE-powered aircraft and therefore would not agree to such a strategy. As indicated in the preceding paragraph, the market investigation has provided no indication that GE’s minority shareholding in the Merged Entity might raise concerns. The majority of the respondents who have expressed a view 88 did not raise any concern.An industry association has also indicated that it does 89not expect the Merged Entity to favour GE’s engines.

(54)With respect to the possible link between GE’s activity in engine manufacturing and the Merged Entity’s activity in engine leasing, the Commission considers an input foreclosure strategy whereby GE would favour the Merged Entity to the detriment of competing engine lessors highly unlikely. First, the Transaction does not bring about any significant change in the market structure. The link between GECAS and GE was pre-existing, and, as a result of the Transaction will be severed as GE will no longer exert control over GECAS, via AerCap. Moreover, as explained above, AerCap has a very limited activity in the engine leasing business. Consequently, the increment brought about by the Transaction will be negligible ([0-5%]). Second, even if GE could in theory decide to exclusively or largely supply the Merged Entity, GE will have no interest and therefore incentive to foreclose engine lessors other than the Merged Entity. The market investigation has shown no signs that pre- Transaction GE engaged in such a foreclosure strategy, nor that the Transaction may raise concerns of this type.

(55)A customer foreclosure strategy is similarly unlikely. First, even if the Merged had the ability to foreclose GE’s competing engine manufacturers by purchasing exclusively or largely GE engines, it would lack any incentive to do so. The Merged Entity’s shareholders other than GE would not agree on such a strategy. It also appears from the market investigation that there are many companies active in the

90 engine leasing market.GE’s competitors in the upstream market would therefore have alternative customers in the downstream market to whom to sell their engines. The market investigation has provided no indication that market participants have concerns regarding a possible customer foreclosure strategy.

5.CONCLUSION

(56)For the above reasons, the European Commission has decided not to oppose the notified operation and to declare it compatible with the internal market and with the EEA Agreement. This decision is adopted in application of Article 6(1)(b) of the Merger Regulation and Article 57 of the EEA Agreement.

For the Commission

(Signed) Margrethe VESTAGER Executive Vice-President

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