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REGULATION (EC) No 139/2004 MERGER PROCEDURE

Article 6(1)(b) NON-OPPOSITION Date: 30/03/2006

In electronic form on the EUR-Lex website under document number 32006M4161

Office for Official Publications of the European Communities L-2985 Luxembourg

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 30/03/2006

In the published version of this decision, some information has been omitted pursuant to Article 17(2) of Council Regulation (EC) No 139/2004 concerning non-disclosure of business secrets and other confidential information. The omissions are shown thus […]. Where possible the information omitted has been replaced by ranges of figures or a general description.

SG-Greffe(2006) D/201423

PUBLIC VERSION

MERGER PROCEDURE ARTICLE 6(1)(b) DECISION

To the notifying parties

Subject: Case No COMP/M.4161 - SEI/VWBN Notification of 24/02/2006 pursuant to Article 4 of Council Regulation No 139/20041

1.On 24/02/2006, the Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004 by which Sumitomo Electric Industries Ltd (“SEI”, Japan), acquires within the meaning of Article 3(1)(b) of the Council Regulation control of Volkswagen Bordnetze GmbH (“VWBN”, Germany) by way of purchase of shares.

2.After examination of the notification, the Commission has concluded that the notified operation falls within the scope of Council Regulation (EEC) No 139/2004 and does not raise serious doubts as to its compatibility with the common market and with the EEA Agreement.

I. THE PARTIES

3.VWBN is a manufacturer of wire harnesses, that is, electronic-electrical distribution systems (EEDS) for the automotive industry. SEI is a manufacturer of optical fibres, electronic devices and automotive parts. SEI is, inter alia, a supplier of EEDS in Asia, and wishes to expand its presence in Europe. SEI believes that the acquisition of VWBN is important in order to be able to compete on an increasingly globalised automotive industry which SEI considers to be characterised by high cost pressure and high bargaining power of carmakers.

1OJ L 24, 29.1.2004 p. 1.

Commission européenne, B-1049 Bruxelles / Europese Commissie, B-1049 Brussel - Belgium. Telephone: (32-2) 299 11 11.

II. CONCENTRATION

4.Post transaction SEI will control VWBN through ownership of a majority of the voting shares. This acquisition of control constitutes a concentration within the meaning of Article 3(1) of the Merger Regulation.

III. COMMUNITY DIMENSION

5.In view of the worldwide and Community turnover figures of SEI and VWBN the concentration has a Community dimension pursuant to Article 1(2) of the Merger Regulation.

IV. THE RELEVANT MARKETS

6.The parties’ activities overlap in the market for EEDS. The parties propose that the relevant product market is the overall market for EEDS, particularly in view of supply-side substitutability. Further segmentation into electrical distribution systems and electronic distribution systems is possible, but need not be further examined, as whatever the market definition no competition problems arise (see below).

7.In numerous previous decisions, the Commission has consistently held that the geographic market for automotive components in the car manufacturing market is at least EEA-wide, and in many cases is probably global. This conclusion was based on the multinational presence of all major competitors, and the existence of EEA-wide technical standards in relation to the relevant component markets under examination,

such that no technical barriers to EEA-wide trade were present.

V. ASSESSMENT

8.SEI and VWBN together would account for just about [10-20%] of the total EEA EEDS market. The increment brought about by the acquisition is minor: VWBN would only add [5-15%] to SEI’s [5-15%]. If the market were further segmented, there would be a combined market share of [10-20%] in each of the electrical and electronic segments.

9.The parties would continue to face competition from the market leader in the EEA, Delphi [20-30%], and other strong competitors such as Valeo [10-20%] and Yazaki [10-20%].

10.Furthermore, the Commission has acknowledged the strong buying power of car manufacturers in previous decisions.

11.The concentration should moreover have a positive effect on the competitive structures in the EEDS market because, as a result of the transaction, the existing links between VWBN and Volkswagen will be severed, and the EEDS production facilities purchased

2See e.g. Case IV/M.872 TRW/Magna; Case IV/M.937 Lear/Keiper; Case IV/M.1196 Johnson Controls/Becker; Case IV/M.1189 Teksid/Norsk Hydro; Case IV/M.1207 Dana/Ecklin; Case IV/M.1587 Dana/GKN; Case COMP/M.2901 Magna/Donnelly.

3See for example Case No COMP/M.3789 Johnson Controls/Robert Bosch/Delphi SLI.

by SEI will be available to supply other motor vehicle manufacturers as well as Volkswagen.

VI CONCLUSION

12.For the above reasons, the Commission has decided not to oppose the notified operation and to declare it compatible with the common market and with the EEA Agreement. This decision is adopted in application of Article 6(1)(b) of Council Regulation (EEC) No 139/2004.

For the Commission Signed Markos KYPRIANOU Member of the Commission

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