The European Commission has approved, under the EU Merger Regulation, the proposed acquisition of Meggitt by Parker. The approval is conditional on full compliance with commitments offered by Parker.
Executive Vice-President Margarethe Vestager, in charge of competition policy, said: “Manufacturers of civil and military aircraft depend on competitive supply chains for all aerospace components. Parker and Meggitt are leading global suppliers of wheels and brakes for a range of aircraft types, including military helicopters and drones. The remedy package offered by Parker will preserve competition in these markets and ensure that aerospace and defence customers have access to sufficient choice of component suppliers and will continue benefitting from competitive prices.”
Parker and Meggitt are both leading global aerospace component suppliers, with wide product portfolios. They compete among others in the design, manufacture and supply of aircraft wheels and brakes and aerospace pneumatic valves.
The Commission's investigation
Given the parties' leading positions, the Commission investigated the impact of the proposed acquisition on competition in the markets for the design, manufacturing and supply of aircraft wheels and brakes for certain types of aircraft.
The market investigation revealed that the transaction would further reduce the already limited number of suppliers of wheels and brakes for small general aviation aircraft, business jets, civil and military helicopters, and military fixed-wing drones. The merged entity would have been further strengthened as the largest supplier in these markets. This would have impacted the prices and innovation in these important components. Competitors generally have a smaller presence in the supply of wheels and brakes for these aircraft types and often do not offer all types of brakes.
The Commission did not find competition concerns in other aerospace component markets in which the parties compete, including aerospace pneumatic valves, as sufficient alternative suppliers would remain active following the transaction.
The proposed remedies
To address the Commission's competition concerns, Parker committed to divest its entire aircraft wheels and brakes division. The commitments include the divestment of Parker's plant in Ohio, US, and a range of provisions to ensure that a buyer can operate the business viably and independently from the merged entity.
These commitments fully remove the overlaps in the design, manufacturing and supply of aircraft wheels and brakes between Parker and Meggitt, globally. The commitments therefore ensure that the current level of competition is maintained in the markets where the Commission identified competition concerns, thus preserving customer choice.
The Commission therefore concluded that the proposed transaction, as modified by the commitments, would not raise competition concerns. The decision is conditional upon full compliance with the commitments.
Companies and products
Parker, headquartered in the US, is active globally in the design, manufacture and supply of motion and control technologies and systems, and in the provision of precision engineered solutions for a variety of mobile, industrial and aerospace markets.
Meggitt, headquartered in the UK, is active globally in the design, manufacture and supply of components and sub-systems for aerospace and defence markets, and selected energy applications.
Merger control rules and procedures
The transaction was notified to the Commission on 21 February 2022.
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 European Economic Area 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). This deadline is extended to 35 working days in cases where remedies are submitted by the parties, such as in this case.
More information will be available on the competition website, in the Commission's public case register under the case number M.10506.
Source: European Commission
Σχόλια