by Staff Writers
Brussels, Belgium (SPX) Jul 22, 2016 Following an in-depth review, the European Commission has approved under the EU Merger Regulation, the acquisition of Arianespace by Airbus Safran Launchers (ASL), a joint venture between Airbus and Safran. This approval is subject to conditions.
Commissioner Margrethe Vestager, in charge of competition policy, said: "A well-functioning satellite and launcher industry is important to guarantee that European companies and institutions can gain access to space at competitive terms. The commitments offered by ASL ensure that after its takeover of Arianespace, all players in the industry will continue to have incentives to innovate."
The Commission had concerns that the transaction would give rise to flows of sensitive information between Airbus and Arianespace to the detriment of competing satellite manufacturers and launch service providers. The Commission's approval is conditional on the implementation of the commitments offered by the companies to address these concerns.
The Commission's investigation
The investigation confirmed the Commission's preliminary concerns that potential flows of sensitive information between the companies could harm competition. This relates in particular to (i) flows of information from Arianespace to Airbus about other satellite manufacturers and (ii) flows of information from Airbus to Arianespace about other launch service providers. These potential flows of information could result in less competitive tenders and less innovation in the markets for satellites and launch services.
+ implement firewalls between Airbus and Arianespace to prevent information flows that could harm competitors. In particular, the companies committed not to share information about third parties with each other save for what is normally required for the everyday operation of the business
+ put in place measures restricting employees' mobility between the companies
+ provide for an arbitration mechanism to be included in all their future non-disclosure agreements signed with third parties, to ensure the effective implementation of the firewalls.
The commitments offered by ASL address the Commission's concerns in full as they will prevent any exchange of sensitive information between Airbus and Arianespace to the detriment of competing satellitemanufacturers and launch service providers.
Other unsubstantiated potential concerns
Discrimination in satellite manufacturers' access to Arianespace's launch services
The Commission's investigation found that besides Arianespace, there are at least two credible alternative launch service providers, SpaceX and ILS, in a market that is highly dynamic and where customers have a certain degree of buyer power. Furthermore, the characteristics of the satellite markets, including the procurement cycle, source of funding and innovation process, are likely to prevent the merged entity from reducing the ability of Airbus' rivals to compete and innovate.
Priority to Ariane launchers to the detriment of Vega launchers
The Commission's investigation found that the Ariane and Vega launchers have different technical characteristics and prices and can rarely be used for the same missions. Even in these rare instances, the merged entity will not be able to discriminate against the Vega launcher. This is because ELV, the Vega launcher manufacturer, will be involved in the exploitation of the launcher and the European Space Agency can also play a role to prevent discrimination due to its supervisory powers.
Procurement of payload adapters and dispensers exclusively from Airbus and ASL
The companies and products
ASL is a 50/50 joint venture controlled by Airbus and Safran that manufactures the Ariane launcher. Airbus is one of the main satellite manufacturers worldwide. Both Airbus and ASL are manufacturers of payload adapters and dispensers, which are components used by launch service providers.
Airbus is a Dutch-based company active in aeronautics, space and defence, including in: (i) satellites; (i) sub-systems for launchers, namely adapters and dispensers for European launchers; and (iii) satellite operations for telecommunication and Earth observation satellites.
Safran is a French company active in aerospace propulsion, aircraft equipment and defence and security.
Merger rules and procedures
The vast majority of notified mergers do 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).
There are currently three on-going phase II merger investigations:
+ The proposed joint venture between the telecommunications activities of Hutchison and VimpelCom in Italy, with a decision deadline on 8 September 2016;
+ The proposed acquisition of the French railway equipment manufacturer Faiveley by the US based Wabtec, with a decision deadline on 24 October 2016; and
+ The proposed acquisition of the Greek gas transmission system operator DESFA by the Azeri state oil company SOCAR.
More information on this case is available on the Commission's competition website, in the public case register under the case number M.7724.
Launch Pad at Space-Travel.com
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