Affected market: Air compressors
No. ME/2733/06
Please note that the full text of the decision can be downloaded by using the link on the right. What follows are extracts regarding the parties, the transaction, jurisdiction, third party views, assessment and decision.
The OFT's decision on reference under section 33(1) given on 7 February 2007. Full text of decision published 22 February 2007.
Please note that square brackets indicate figures or text which have been deleted or replaced at the request of the parties for reasons of commercial confidentiality.
PARTIES
Atlas Copco Italia S.p.A, a wholly-owned subsidiary of Atlas Copco AB (Atlas Copco) is an international industrial group based in Sweden. In the UK it is active in the sales and marketing of compressors, generators, construction and mining equipment, pneumatic and electric power tools and assembly systems.
ABAC Aria Compressa S.p.A, (ABAC) is based in Turin and is part of the ABAC Group. It has both an 'Industrial Division', which is active in the production and sale of compressors and systems for the production of compressed air for industrial and professional applications, including piston air compressors, rotary screw air compressors and turbo air compressors, and a 'Consumer Division', which makes compressors largely for domestic use. ABAC's UK turnover in 2005 was £[ ]million.
TRANSACTION
On 13 July 2006 Atlas Copco announced it intends to acquire the 'Industrial Division' of ABAC. The administrative deadline is 7 February 2007.
JURISDICTION
As a result of this transaction Atlas Copco and ABAC will cease to be distinct. The parties overlap in the supply of air compressors, with UK shares of supply of about [25-35] per cent by value for stationary, oil-injected rotary air compressors (all power ranges).
The share of supply test in section 23 of the Enterprise Act 2002 (the Act) is met. The OFT therefore believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation.
THIRD PARTY VIEWS
One third party was concerned by the merger, as addressed in portfolio issues. All other third parties, including customers, were unconcerned and most supported the parties' argument that their product ranges are largely complementary, and therefore that the parties are not currently close competitors.
ASSESSMENT
The parties are stronger at the different ends of the product range, and third parties have highlighted the complementary nature of their respective offerings. Shares of supply are below [25 - 35] per cent and a number of rivals with shares greater than ABAC remain in each segment. The concern expressed by one third party about portfolio effects and consequent foreclosure, is not supported by the evidence or by other third party respondents.
Consequently, the OFT does not believe that it is or may be the case that the merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.
DECISION
This merger will therefore not be referred to the Competition Commission under section 33(1) of the Act.
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