The European Commission has cleared under the EU Merger Regulation the proposed acquisition of joint control over Elbe Flugzeugwerke GmbH (EFW) by EADS Deutschland and aircraft maintenance provider Singapore Technologies Aerospace (STA). EFW is currently solely owned by EADS. The Commission concluded that the transaction would not raise competition concerns because it would not significantly alter the market structure.

The creation of the EFW joint venture occurs in the wider context of a proposed cooperation between Airbus, EFW and STA concerning the following activities: the set-up of a new “passenger-to freighter” (P2F) aircraft conversion for Airbus A330, the offering of maintenance, repair and overhaul (MRO) services and the production of components for Airbus aircraft.

The parties’ activities overlap for P2F conversion and heavy maintenance. The Commission’s investigation showed that in the market for P2F conversion the merging parties would have a relatively limited combined market position and that a significant number of alternative competitors will remain on the market. Moreover, third-party converters and independent companies active in aircraft manufacturing and MRO services can easily enter the P2F conversion market. As to the parties’ overlap in heavy maintenance MRO services, the Commission investigation showed that this overlap will remain very limited in a market which is heavily fragmented.

The Commission therefore concluded that the transaction would not significantly impede

effective competition in the European Economic Area (EEA) or any substantial part of it.

The transaction was notified to the Commission on 8 August 2012.

Companies and products
EADS Deutschland is based in Ottobrunn, Germany and it is ultimately controlled by EADS, the parent company of the EADS group with its seat in Leiden, the Netherlands. EADS, through Airbus, manufactures and sells commercial aircraft, including the A330-200F freighter aircraft, which is the only commercial freighter currently produced by EADS. Outside of EFW, EADS does not offer any P2F conversion services.

STA is the aerospace arm of ST Engineering based in Singapore. STA is a dedicated MRO service provider for Airbus and Boeing aircraft mainly outside Europe and it also offers P2F conversion solutions for Boeing B-757 aircraft

EFW is currently active in the commercial aircraft sector, including P2F conversion of civil passenger aircraft (Airbus A300-600 and A310-300), heavy maintenance for Airbus aircraft in Europe, and the production of flat composite panels for Airbus aircraft.

Merger control rules and procedures
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.

The vast majority of 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).