Mergers: Commission clears acquisition of an automotive component business of Faurecia by Plastic Omnium, subject to conditions

MIL OSI – Source: European Union – Press Release/Statement

Headline: Mergers: Commission clears acquisition of an automotive component business of Faurecia by Plastic Omnium, subject to conditions

Commissioner Margrethe Vestager, in charge of competition policy, said: “Plastic Omnium offered to divest key production facilities to address our concerns. This ensures that car manufacturers in Europe will continue to have a choice of suppliers for automotive parts, such as bumpers, at competitive prices after the takeover”.
Both Plastic Omnium and the Faurecia business that it is acquiring manufacture plastic exterior components for the automotive sector such as bumpers and hatchbacks /tailgates.
The Commission had concerns that the transaction, as originally notified, would have led to price rises for plastic bumpers and other car components. The commitments offered by the companies address these concerns.

The Commission’s investigation
The Commission had concerns that the merged entity would not have faced sufficient competitive pressure from the remaining players in the market for the production and supply of plastic bumpers in the North, East, and West of France, Belgium and Spain. In these areas, car manufacturers would have been left with no or very limited alternative suppliers after the takeover.
For the same reasons, the investigation also raised competition concerns on the market for the production and supply of so-called front-end carriers (the structural component behind the bumper), plastic hatchbacks/tailgates and for the assembly of so-called front-end modules (complete front assemblies often including the front-end carrier, crash beam, bumper, grilles, etc.) at European Economic Area level.

The commitments
To address the Commission’s competition concerns, Plastic Omnium submitted the following commitments:
Plastic Omnium offered to divest five Faurecia plants mostly dedicated to the production of plastic bumpers (four in France, one in Spain). The acquisition and operation of these facilities by a third party will fully replace the competitive constraint with regard to the supply of plastic bumpers in these regions that would otherwise have been lost through the transaction. These commitments will also eliminate the possible adverse effects that the transaction would have brought about for the production and supply of front-end carriers and plastic hatchbacks and tailgates, as they fully remove the market share increment resulting from the merger.
Plastic Omnium also committed to divest two Faurecia plants dedicated to the assembly of front-end modules in Germany, including the research and development (R&D) centre connected to these plants. The acquisition of these facilities ensures that a third party will replace the competitive constraint that would otherwise have been lost through the transaction.
These commitments address all competition concerns identified by the Commission. The Commission’s decision to approve the transaction is conditional upon full implementation of the commitments.
The transaction was notified to the Commission on 23 May 2016.

Companies and products
Plastic Omnium is a global company specialised in manufacturing automotive equipment and offering waste management and environment related services. Plastic Omnium is ultimately solely controlled by Burelle S.A. (France).
The Faurecia Exterior Business is engaged in the manufacturing and supply of painted plastic automotive exterior components and the assembly of front-end modules for light vehicles to vehicle manufacturers at global level.

Merger control rules and procedures
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 EEA or any substantial part of it.
The vast majority of 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 case remedies are submitted by the parties, such as in this case.
More information is available in the Commission’s public case registry under the case number M.7893.