The European Commission has approved, under the EU Merger
Regulation, the proposed acquisition of Meggitt by Parker. The
approval is conditional on full compliance with commitments
offered by Parker.
Executive Vice-President
Margarethe Vestager, in charge of
competition policy, said: “Manufacturers of civil and
military aircraft depend on competitive supply chains for all
aerospace components. Parker and Meggitt are leading global
suppliers of wheels and brakes for a range of aircraft types,
including military helicopters and drones. The remedy package
offered by Parker will preserve competition in these markets and
ensure that aerospace and defence customers have access to
sufficient choice of component suppliers and will
continue benefitting from competitive prices.”
Parker and Meggitt are
both leading global aerospace component suppliers, with wide
product portfolios. They compete among others in the design,
manufacture and supply of aircraft wheels and brakes and
aerospace pneumatic valves.
The Commission's investigation
Given the parties' leading positions, the Commission investigated
the impact of the proposed acquisition on competition in the
markets for the design, manufacturing and supply of aircraft
wheels and brakes for certain types of aircraft.
The market investigation revealed that the transaction would
further reduce the already limited number of suppliers of wheels
and brakes for small general aviation aircraft, business jets,
civil and military helicopters, and military fixed-wing drones.
The merged entity would have been further strengthened as the
largest supplier in these markets. This would have impacted the
prices and innovation in these important components. Competitors
generally have a smaller presence in the supply of wheels and
brakes for these aircraft types and often do not offer all types
of brakes.
The Commission did not find competition concerns in other
aerospace component markets in which the parties compete,
including aerospace pneumatic valves, as sufficient alternative
suppliers would remain active following the transaction.
The proposed remedies
To address the Commission's competition concerns, Parker
committed to divest its entire aircraft wheels and brakes
division. The commitments include the divestment of Parker's
plant in Ohio, US, and a range of provisions to ensure that a
buyer can operate the business viably and independently from the
merged entity.
These commitments fully remove the overlaps in the design,
manufacturing and supply of aircraft wheels and brakes between
Parker and Meggitt, globally. The commitments therefore ensure
that the current level of competition is maintained in the
markets where the Commission identified competition concerns,
thus preserving customer choice.
The Commission therefore concluded that the proposed transaction,
as modified by the commitments, would not raise competition
concerns. The decision is conditional upon full compliance with
the commitments.
Companies and products
Parker, headquartered in the US, is active
globally in the design, manufacture and supply of motion and
control technologies and systems, and in the provision of
precision engineered solutions for a variety of mobile,
industrial and aerospace markets.
Meggitt, headquartered in the UK, is active
globally in the design, manufacture and supply of components and
sub-systems for aerospace and defence markets, and selected
energy applications.
Merger control rules and procedures
The transaction was notified to the Commission on 21 February
2022.
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 European Economic Area or any
substantial part of it.
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). This deadline
is extended to 35 working days in cases where remedies are
submitted by the parties, such as in this case.
More information will be available on the competition website, in the
Commission's public case register under the
case number M.10506.
