Antitrust Law Daily Wrap Up, ANTITRUST NEWS: EC approves joint venture by Wood Group and Siemens, (Apr 24, 2014)
Organizations Mentioned:Siemens | Wood Group
The European Commission (EC) announced today that it has cleared under European Union (EU) merger regulations a proposed joint venture for rotating equipment services, created by Wood Group (US) and Siemens (Germany). The EC's investigation confirmed that the proposed transaction did not raise competition concerns.
Wood Group provides a range of services to the oil and gas and the power generation industries worldwide, including engineering, production support, maintenance management and industrial gas turbine overhaul, and repair services.
Siemens is a global engineering and electronics conglomerate with activities in a number of sectors, including the energy sector. The company is a manufacturer of rotating equipment and provides aftermarket services. Siemens provides after-sale services for its own manufactured equipment through its business unit Siemens Energy Services. In relation to equipment manufactured by other companies, Siemens acts as a service provider through its business unit TurboCare, through which it provides maintenance support and other services. TurboCare will be added to the joint venture.
The joint venture will provide services aimed at a range of rotating equipment, including mature technology gas turbines, steam turbines, generators, pumps, and compressors.
The Commission's investigation focused in particular on aftermarket services, including the supply of replacement parts and component repair for mature gas turbines. Mature gas turbines are those older than approximately 15 years, and their warranty usually has expired. On the market of services for mature gas turbines, Original Equipment Manufacturers (OEMs) such as Siemens, General Electric, and Alstom compete with Independent Service Providers (ISPs) such as Wood Group and Siemens' subsidiary TurboCare, which will be contributed to the joint venture.
On the market for services for all mature gas turbines of all OEM brands, the combined market share of Wood Group and Siemens and the joint venture remains limited. A large number of strong rivals, both OEM and ISP, remain. They will continue to be actively competing in the European Economic Area (EEA) and worldwide. Regarding a market of services for mature gas turbines manufactured by Siemens only, the transaction leads to a limited overlap.
In line with the previous decision-making practice of the Commission, the investigation confirmed that it is not appropriate to distinguish the market further depending on the capacity of the gas turbine. Competitors are able to switch between different power categories within a short time frame and without incurring significant costs. The market investigation also demonstrated that entry of new players occurred in the past and new entry is expected in the near future. The Commission was notified of the transaction on March 17, 2014.
Companies: Wood Group; Siemens
News: Antitrust IndustryNewsTrends