Mergers: Commission approves Wood Group and Siemens joint venture
25 Apr 2014 11:32 AM
The European Commission has cleared the proposed
creation by Wood Group (US) and Siemens (Germany) of a joint venture (JV) for
rotating equipment services under the EU Merger Regulation. The
Commission's investigation confirmed that the proposed transaction does not
raise competition concerns.
Under the EU Merger Regulation, the European Commission
has cleared the proposed creation by Wood Group (US) and Siemens (Germany) of a
joint venture (JV) for rotating equipment services. The Commission's
investigation confirmed that the proposed transaction does not raise
competition concerns.
The
Commission's investigation focused in particular on aftermarket services,
including the supply of replacement parts and component repair for mature gas
turbines. Mature gas turbines are those older than approximately fifteen years,
and their warranty has usually expired. On the market of services for mature
gas turbines, Original Equipment Manufacturers (OEMs) such as Siemens, General
Electric and Alstom compete with Independent Service Providers (ISPs) such as
Wood Group and Siemens' subsidiary TurboCare which is contributed to the
JV.
On
the market for services for all mature gas turbines of all OEM brands (i.e.
including Siemens and other brands), the combined market share of Wood Group
and Siemens and the JV remains limited. A large number of strong rivals, both
OEM and ISP remain, which will continue to be actively competing in the
European Economic Area (EEA) and worldwide. Regarding a market of services for
mature gas turbines manufactured by Siemens only, the transaction leads to a
limited overlap. In line with the previous decision making practice of the
Commission the investigation confirmed that it is not appropriate to
distinguish the market further depending on the capacity of the gas turbine.
Competitors are able to switch between different power categories within a
short time frame and without incurring significant costs. The market
investigation also demonstrated that entry of new players occurred in the past
and new entry is expected in the near future.
The
Commission therefore concluded that the transaction would not raise competition
concerns.
The
transaction was notified to the Commission on 17 March 2014.
Companies and products
Wood Group provides a range of services to the oil and
gas, and power generation industries worldwide, including engineering,
production support, maintenance management and industrial gas turbine overhaul
and repair services.
Siemens is a global engineering and electronics
conglomerate with activities in a number of sectors, including the energy
sector. Siemens is an OEM for rotating equipment and provides aftermarket
services. Siemens provides after-sale services for its own manufactured
equipment through its business unit Siemens Energy Services. In relation to
equipment manufactured by other OEMs, Siemens acts as an ISP through its
business unit TurboCare, through which it provides maintenance support and
other services. TurboCare will be added to the JV.
The
JV will provide services aimed at a range of rotating equipment, including
mature technology gas turbines, steam turbines, generators, pumps and
compressors.
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).
More information will be available on the competition website, in the Commission's public case register under the case number M.7083.