Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: EC approves Siemens’ acquisition of Rolls-Royce business, (Aug 4, 2014)

The European Commission (EC) has approved Siemens AG of Germany’s proposed acquisition of Rolls-Royce plc’s aero-derivative gas turbine business, compressor activities and aftermarket services, and Rolls-Royce’s 50 percent stake in Rolls Wood Group. In authorizing the acquisition, the EC determined that the transaction did not raise competition concerns, the companies were not close competitors, and a number of competitors will remain in the market post-acquisition.

According to the EC, Siemens manufacturers industrial gas turbines, and Rolls-Royce manufactures aero-derivative gas turbines (ADGT). Its investigation concluded that customers do not see Siemens and Rolls-Royce as close competitors, due to the technological differences between the two gas turbine products. In addition, the EC acknowledged that there were a number of strong competitors that would be able to effectively compete with Siemens after the merger.

Although concerns were raised on whether the merged entity could stop supplying Rolls-Royce’s ADGTs to compressor manufacturers and prevent them from competing in certain offshore oil and gas projects, the EC found this scenario unlikely. Specifically, it determined that, because compressors are typically viewed as the most customized component of oil and gas compressor sets, consumers are not likely to purchase sets containing an inadequate compressor model. In addition, the EC determined that, because there will be additional ADGT sources on the market, the merged entity’s ability to shut out competitors from ADGT supplies is significantly strained.

Companies: Rolls-Royce plc; Siemens AG; Rolls Wood Group; John Wood Group PLC

News: AcquisitionsMergers Antitrust