Mergers: EC opens in-depth investigation into ASL's acquisition of Arianespace
The European Commission has opened an in-depth investigation to assess the proposed acquisition of Arianespace by Airbus Safran Launchers (ASL) under the EU Merger Regulation.
The Commission has concerns that the proposed transaction may result in less innovation and higher prices in the satellite and launch service markets.
Commissioner Margrethe Vestager, in charge of competition policy, said: "A competitive space industry has a crucial role in strengthening the EU's industrial base and boosting our global competitiveness.The Commission therefore needs to make sure that all players in the space industry continue to have strong incentives to innovate".
Arianespace is the global leader for launches of commercial satellites to geostationary transfer orbits. Its main competitors are the US-based companies ILS and SpaceX. In addition, Arianespace has a de facto monopoly in the European markets for institutional launches. For its services, Arianespace uses launchers produced by three different companies, including the Ariane launcher manufactured by ASL.
ASL is a 50/50 joint venture controlled by Airbus and Safran. Airbus is also one of the leading satellite manufacturers worldwide. Both Airbus and ASL are manufacturers of payload adapters and dispensers, which are components sourced and used by launch service providers.
The Commission's concerns
The Commission has concerns that the transaction might lead the merged entity to:
- discriminate against satellite manufacturers competing with Airbus on price or other terms regarding their access to Arianespace's launch services (slot allocation, access to technical information on launcher developments). This would reduce the incentives of Airbus' rivals to invest and innovate in satellite manufacturing. Moreover, aligning the incentives of Airbus, ASL and Arianespace might also lead to critical information about satellites or launch service competitors being shared between Arianespace and Airbus.
- give priority to launch services connected to Ariane launchers since ASL produces this launcher. This would be to the detriment of the competing launcher Vega, which is manufactured by ELV and currently can only be commercialised by Arianespace.
- procure payload adapters and dispensers exclusively from Airbus and ASL, regardless of the price and quality offered by competitors. This would be detrimental to these competitors.
Overall, the Commission is at this stage concerned that the transaction might lead to higher prices, less customer choice and a reduction in research and development efforts in the satellite, launcher and launcher equipment and launch services markets.
The Commission will now investigate the transaction in-depth in order to determine whether its competition concerns are confirmed.
The transaction was notified to the Commission on 8 January 2016. The Commission now has 90 working days, until 12 July 2016, to take a decision. The opening of an in-depth investigation does not prejudge the outcome of the investigation.
Companies and products
Arianespace is a French company offering satellite launch services to private and institutional satellite operators. Arianespace is entrusted by the European Space Agency (ESA) with the commercial exploitation of the two ESA-funded launchers: Ariane, which is developed and manufactured by ASL, and Vega, which is developed and manufactured by ELV, a joint venture between Avio and the Italian Space Agency. In addition, Arianespace also offers the possibility to launch with the Soyuz launcher, which is developed and manufactured by TsSKB of Russia.
ASL, a 50/50 joint venture between Airbus and Safran, manufactures the Ariane launcher.
Airbus is a Dutch-based company active in aeronautics, space and defence. Within its Defence and Space division, Airbus is active 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 control rules and procedures
The Commission has the duty to assess mergers and acquisitions involvingcompanies 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).
There are currently three other on-going phase II merger investigations:
- The proposed acquisition of Telefónica UK by Hutchinson 3G UK, with a decision deadline on 22 April 2016.
- The proposed acquisition of oilfield provider Baker Hughes by rival Halliburton.
- The proposed acquisition of the Greek gas transmission system operator DESFA by the Azeri state oil company SOCAR.
Latest News from
EU clears way for the EU Digital COVID Certificate15/06/2021 09:25:00
The Presidents of the three EU institutions, the European Parliament, the Council of the EU and the European Commission yesterday attended the official signing ceremony for the Regulation on the EU Digital COVID Certificate, marking the end of the legislative process.
Council agrees on new rules for cross-border energy infrastructure14/06/2021 16:48:00
The Council recently (11 June 2021) reached a general approach on the revision of the Trans-European Networks for Energy (TEN-E) Regulation.
Council approves conclusions on an EU renovation wave14/06/2021 15:25:00
The Council recently (11 June 2021) approved conclusions on a renovation wave that repairs the economy now, and creates green buildings for the future.
Council approves EU-UK agreement on fishing opportunities14/06/2021 13:25:00
The Council recently (11 June 2021) approved the agreement between the European Union and the United Kingdom on fishing opportunities for 2021 and, for deep-sea stocks, for 2021 and 2022.
EU-U.S Joint statement on the humanitarian emergency in Tigray14/06/2021 09:25:00
EU-U.S Joint statement given recently (10 June 2021) on the humanitarian emergency in Tigray.
Talent Partnerships: Commission launches new initiative to address EU skills shortages and improve migration cooperation with partner countries11/06/2021 16:33:00
Today, the Commission is launching Talent Partnerships, a key initiative under the New Pact on Migration and Asylum that will help to address skills shortages in the European Union and to strengthen mutually-beneficial partnerships on migration with third countries.
Central America and Mexico: EU reaffirms support with €18.5 million in humanitarian and development aid11/06/2021 15:25:00
The EU yesterday announced at the 'Solidarity event for forcibly displaced persons and host communities in Central America and Mexico', that it will allocate €18.5 million in aid. Of this sum, €12 million represents humanitarian funding to Central America, and €6.5 million constitutes development assistance.
Council endorses new EU strategy on adaptation to climate change11/06/2021 14:38:00
The Council yesterday approved conclusions endorsing a new strategy that outlines a long-term vision for the EU to become a climate-resilient society that is fully adapted to the unavoidable impacts of climate change by 2050.
Child Labour: Statement by the European Commission and the High Representative on the World Day against Child Labour11/06/2021 13:25:00
Child Labour: Statement given by the European Commission and the High Representative on the World Day against Child Labour.
Education: EU increases its commitment to Global Partnership for Education with a pledge of €700 million for 2021-202711/06/2021 12:38:00
Ahead of the G7 Summit, President of the European Commission Ursula von der Leyen yesterday announced that the European Union is pledging €700 million for the Global Partnership for Education (GPE) to help transform education systems for more than one billion girls and boys in up to 90 countries and territories.