Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: EC to investigate Airbus Safran Launchers’ acquisition of Arianespace, (Feb 26, 2016)

By Linda O’Brien, J.D., LL.M.

The European Commission (EC) has opened an in-depth investigation into assess the proposed acquisition of Arianespace by Airbus Safran Launchers (ASL) under the European Union (EU) merger regulation, the EC announced today. The Commission has concerns that the proposed transaction may result in less innovation and higher prices in the satellite and launch service markets.

Arianespace is a French company offering satellite launch services to private and institutional satellite operators. Its main competitors are ILS and SpaceX, both of the United States. In addition, Arianespace has a monopoly in the European markets for institutional launches. For its services, Arianespace uses launchers produced by three different companies, including the Ariane launcher manufactured by ASL.

ASL is a joint venture controlled by Airbus and Safran. Airbus is a Dutch-based company active in aeronautics, space, and defense. Safran is a French company active in aerospace propulsion, aircraft equipment, defense, and security. Both Airbus and ASL are manufacturers of payload adapters and dispensers, which are components sourced and used by launch service providers.

The EC has concerns that the transaction might lead the merged entity to: (1) discriminate against satellite manufacturers competing with Airbus on price or other terms regarding their access to Arianespace's launch services; (2) give priority to launch services connected to Ariane launchers, since ASL produces this launcher; and (3) procure payload adapters and dispensers exclusively from Airbus and ASL, regardless of the price and quality offered by competitors.

Overall, the EC is concerned that the transaction might lead to higher prices, less customer choice, and a reduction in research and development efforts in the satellite, launcher and launcher equipment, and launch services markets. The Commission will now investigate the transaction in order to determine whether its competition concerns are confirmed.

The Commission was notified of the transaction on January 8 and has until July 12 to make a decision.

"A competitive space industry has a crucial role in strengthening the EU's industrial base and boosting our global competitiveness,” said Margrethe Vestager, EU Commissioner in charge of competition policy. “The Commission therefore needs to make sure that all players in the space industry continue to have strong incentives to innovate."

Companies: Airbus Safran Launchers; Arianespace SA

News: AcquisitionsMergers Antitrust