[EC Competition] Mergers: Commission clears acquisition of Tognum and Bergen by Daimler and Rolls-Royce

Mergers: Commission clears acquisition of Tognum and Bergen by Daimler and Rolls-Royce

Brussels, 25 July 2011 – The European Commission has cleared under the EU Merger Regulation the proposed acquisition of joint control over Tognum AG of Germany and Bergen of Norway by Daimler AG of Germany and Rolls-Royce Group plc of the United Kingdom. Bergen is currently controlled by Rolls-Royce. After examining the operation, the Commission concluded that the merged entity will continue to face several strong and effective competitors in the markets.

The examination of the transaction showed that overlaps between the parties activities exist only between Tognum and Bergen, notably for the production and sale of diesel reciprocating engines for marine applications (i.e. marine propulsion and marine auxiliary) and for gas and diesel gensets used for power generation. The Commission found that the increment in market shares resulting from the merger will be moderate and that the combined entity will continue to face several strong, effective competitors, such as Caterpillar, GE and MAN.

The Commission also assessed the vertical relationship between fuel injection systems produced by Tognum through its wholly-owned subsidiary, L’Orange, and Bergen’s diesel reciprocating engines for marine application, that use the former as an input. It concluded that there would be no risk of input foreclosure post-merger as there are alternative and competing sources of supply for fuel injection systems.

The Commission therefore concluded that the proposed concentration would not significantly impede effective competition in the European Economic Area (EEA) 1 or any substantial part of it. The deal was notified to the Commission on 17 June.

Daimler is a German company active in the manufacturing and sale of premium cars and commercial vehicles, as well as the provision of automotive financial services including financing, leasing insurance and fleet management.

Rolls-Royce is a UK company that develops and manufactures civil aircraft engines and power systems for aerospace, marine and energy applications. It also operates a marine business which designs ships and produces marine equipment such as ship propulsion systems, deck machinery and steering gear. Through Bergen, Rolls-Royce is active in the development, manufacture and sale of diesel and gas reciprocating engines and generator sets for off-highway applications (such as power generation and marine applications).

Tognum is a German company active in the development, manufacture and sale of diesel and gas reciprocating engines and generator sets for off-highway applications (such as industrial applications, power generation applications and marine applications).

Merger control rules and procedures

The Commission, in 1989, was given the power to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation). Its duty is to prevent concentrations that would significantly impede effective competition in the European Economic Area (EEA)1 or any substantial part of it.

The vast majority of mergers does not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).

A non-confidential version of today’s decision will be available at:

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_6172

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