Investigation into Nidec's proposed acquisition of Whirlpool's refrigeration compressor business
The European Commission has opened an in-depth investigation to assess Nidec's proposed acquisition of Embraco, the compressor business of Whirlpool, under the EU Merger Regulation. The Commission is concerned the takeover may reduce competition in the supply of refrigeration compressors.
Commissioner Margrethe Vestager, in charge of competition policy, recently said: "Refrigeration compressors are used not only in commercial applications but also in our homes, in fridges and freezers. This industry is already highly concentrated, therefore the Commission will closely analyse the impact on competition of Nidec's proposed acquisition of Embraco, to ensure their customers and final consumers are not harmed due to higher prices or less choice."
Nidec and Embraco, the compressor business of Whirlpool, both produce compressors that are used in refrigeration appliances for household use, such as kitchen refrigerators and freezers, and for light commercial use, for instance beverage coolers, commercial refrigerators and freezers, and refrigerated display cabinets.
Compressors run at either a fixed speed, regulating the temperature by turning on and off as needed, or variable speed, adjusting the speed at which they run depending on the need for cooling in order to maintain the desired temperature. Variable speed compressors tend to be more energy efficient, quieter and more expensive than fixed speed compressors with the same cooling capacity. As energy efficiency standards are progressively increased in the refrigeration appliances industry, the demand for variable speed compressors is expected to grow at the expense of fixed speed compressors.
Nidec and Embraco are among the leading suppliers worldwide and in the European Economic Area (EEA) for variable speed compressors used in household applications. They are also the two leading suppliers of fixed and variable speed compressors for light commercial applications, at both global and EEA level.
The Commission's competition concerns
The Commission's initial market investigation identified the following main concerns:
- For variable speed compressors used in household applications, the elimination of competition between Nidec and Embraco could lead to higher prices and less choice.
- For both fixed and variable speed compressors used in light commercial applications, the elimination of competition between Nidec and Embraco could lead to higher prices and less choice.
Nidec submitted commitments in order to address the competition concerns identified by the Commission. Having tested these commitments with market players, the Commission concluded that they were insufficient to remove the concerns raised.
The transaction was notified to the Commission on 8 October 2018. The Commission now has 90 working days, until 15 April 2019, to take a decision. The opening of an in-depth investigation does not prejudge the outcome of the investigation.
Companies and products
Nidec, based in Japan, is active in the engineering, manufacture, and distribution of a range of electric motors and motor application products. Since its acquisition of Secop GmbH in 2017, Nidec also manufactures and sells compressors for use in refrigeration appliances. Nidec manufactures compressors in Austria, Slovakia and China.
Embraco, based in Brazil, is active in the manufacture and sale of compressors for use in refrigeration appliances. Embraco manufactures compressors in Slovakia, Brazil, Mexico and China. Embraco is owned and controlled by Whirlpool, a U.S. company that manufactures a full line of home appliances and related products, including refrigeration appliances.
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 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).
In addition to the current transaction, there are currently six on-going phase II merger investigations: the proposed creation of a joint venture by Tata Steel and ThyssenKrupp, the proposed acquisition of Aurubis Rolled Products and Schwermetall by Wieland, the proposed acquisition of MKM by KME, the proposed acquisition of Gemalto by Thales, the proposed acquisition of Alstom by Siemens and the proposed acquisition of Solvay's nylon business by BASF.
Latest News from
Agreement on new rules to fight non cash payment fraud12/12/2018 16:33:00
The EU is stepping up the fight against fraud involving non-cash means of payment (credit cards, online shopping, etc.) by upgrading and modernising the existing rules.
EC approves acquisition of Gemalto by Thales, subject to conditions12/12/2018 15:25:00
The EC has approved under the EU Merger Regulation the proposed acquisition of Gemalto by Thales. The approval is conditional on the divestment of Thales' general purpose hardware security modules business.
EC welcomes the adoption of stronger rules to stop cyber-criminals12/12/2018 14:47:00
The European Parliament and the Council reached political agreement on the EC’s proposal to strengthen rules to combat fraud and counterfeiting of non-cash means of payment – such as bank cards, cheques, mobile payments and virtual currencies.
EC launches Circular Plastics Alliance to foster the market of recycled plastics in Europe12/12/2018 14:10:00
The EC has launched an alliance of key industry stakeholders covering the full plastics value chain as part of its persisting efforts to reduce plastics littering, increase the share of recycled plastics and stimulate market innovation.
VAT: New details on rules for e-commerce presented12/12/2018 13:38:00
The EChas announced new detailed measures that will pave the way for a smooth transition to new VAT (Value-Added Tax) rules for e-commerce that come into force in January 2021.
Council endorses agreement on EU budget for 201912/12/2018 12:25:00
On 11 December 2018, the Council endorsed the agreement reached with the European Parliament on the EU budget for 2019.
Exchanging criminal records: EU agrees a reformed ECRIS system12/12/2018 11:10:00
The EU is introducing new rules to improve the way member states exchange information on convictions of third country nationals.
EDPS welcomes adoption of new data protection rules for EU institutions12/12/2018 10:37:00
The adoption of new data protection rules for the EU institutions and bodies represents another vital step forward in the development of a comprehensive EU framework for data protection in the digital age, the European Data Protection Supervisor (EDPS) has said.
EU negotiators agree on strengthening Europe's cybersecurity11/12/2018 15:25:00
The European Parliament, the Council and the EC have reached a political agreement on the Cybersecurity Act which reinforces the mandate of the EU Agency for Cybersecurity, (European Union Agency for Network and Information and Security, ENISA) so as to better support Member States with tackling cybersecurity threats and attacks.