Antitrust Law Daily Wrap Up, ANTITRUST NEWS: EU approves ZF Friedrichshafen’s acquisition of TRW, (Mar 13, 2015)

By Edward L. Puzzo, J.D.

The European Commission has approved automotive product provider ZF Friedrichshafen’s acquisition of competitor TRW, the Commission announced yesterday (IP/15/4600). ZF Friedrichshafen of Germany and TRW of the United States are global suppliers of automotive products—the two largest suppliers of chassis components for car and truck manufacturers in the European Economic Area (EEA).

The Commission had concerns that the transaction, as initially proposed, could have led to price increases for chassis components because the few remaining players in this market would have been unable to sufficiently constrain the merged entity. The Commission's investigation showed that it is difficult for new players to enter the market, due to the high technical requirements and investments needed to do so. Moreover, most customers are not able to produce such components in-house and appear to have insufficient buyer power to counteract any potential price increases by the merged entity. The Commission therefore had concerns that the proposed transaction would have led to price increases for car and truck chassis components.

In order to address the Commission's concerns, ZF committed to divest TRW's chassis components businesses in the EEA. The divestment business covers both TRW's manufacturing and research and development capabilities in this field, which enable TRW to produce and supply these components. In particular, it includes plants, intellectual property rights, current customer and supply contracts, knowhow, transitional services, licenses and permits, as well as testing and production assets. These divestments will remove the entire overlap between the companies in the manufacture and supply of chassis components for cars and trucks. Moreover, the divestments would allow the entry of an additional manufacturer and supplier of these products.

The Commission concluded that the proposed transaction, as modified by the commitments, would not raise competition concerns. This decision is conditional upon full compliance with the commitments.

The case number is M.7420.

Companies: ZF Friedrichshafen AG; TRW Automotive Holdings Corp.

News: AcquisitionsMergers Antitrust