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EC clears proposed acquisition of BarcoVision by Itema
04 Aug '08
3 min read
The European Commission has approved under the EU Merger Regulation the proposed acquisition of BarcoVision of Belgium by the Italian company Itema. Itema produces textile machinery while BarcoVision manufactures sensors and other inputs for the textiles industry. After an in-depth examination, launched in April 2008 (see IP/08/571), the Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.
Competition Commissioner Neelie Kroes said: “Itema and BarcoVision are both key players in the textile production chain; this merger will bring together a major textile machine manufacturer with one of its sensor suppliers. We looked at this very carefully, but it is now clear that this deal will have no negative consequences on textile quality or prices.”
Itema is active in the production and sale of machinery for textile manufacturing. Itema is one of the three main companies supplying textile mill owners with winders, which are machines used to stock yarn before it is woven or knitted.
BarcoVision focuses on the production and sale of sensors for textile machinery as well as software systems specifically designed for the textile industry. BarcoVision is one of the two main companies currently producing sensors for winders, an essential component of the winder to ensure yarn and textile quality.
On 14 April 2008, the Commission opened an in-depth investigation (see IP/08/571) to assess whether the new entity would be likely to stop supplying competing winder manufacturers with sensors, thereby raising the prices of winders for textile mills.
The Commission's analysis is in line with its Guidelines on the assessment of non-horizontal mergers (see IP/07/1780). It mainly focused on the merged company's incentives to stop selling sensors to competitors – effectively withdrawing from the sensor market in order to raise its competitors' costs. The Commission concluded that such a strategy would not be profitable for the merged company: the additional profits made on the winder market would not compensate the losses incurred on the sensor market by refusing to sell to competitors.
The Commission also assessed the incentives of the other main supplier of sensor to increase sensor prices following the merger and concluded that the merged firm's ability to raise competitors' costs will be limited. In addition, competitors on the winder market are able to start in-house production of sensors in the medium term and this would further constrain the sensor suppliers' behaviour. As a result, the Commission concluded that the proposed concentration does not raise any competition concerns.
Competition Commissioner Neelie Kroes said: “Itema and BarcoVision are both key players in the textile production chain; this merger will bring together a major textile machine manufacturer with one of its sensor suppliers. We looked at this very carefully, but it is now clear that this deal will have no negative consequences on textile quality or prices.”
Itema is active in the production and sale of machinery for textile manufacturing. Itema is one of the three main companies supplying textile mill owners with winders, which are machines used to stock yarn before it is woven or knitted.
BarcoVision focuses on the production and sale of sensors for textile machinery as well as software systems specifically designed for the textile industry. BarcoVision is one of the two main companies currently producing sensors for winders, an essential component of the winder to ensure yarn and textile quality.
On 14 April 2008, the Commission opened an in-depth investigation (see IP/08/571) to assess whether the new entity would be likely to stop supplying competing winder manufacturers with sensors, thereby raising the prices of winders for textile mills.
The Commission's analysis is in line with its Guidelines on the assessment of non-horizontal mergers (see IP/07/1780). It mainly focused on the merged company's incentives to stop selling sensors to competitors – effectively withdrawing from the sensor market in order to raise its competitors' costs. The Commission concluded that such a strategy would not be profitable for the merged company: the additional profits made on the winder market would not compensate the losses incurred on the sensor market by refusing to sell to competitors.
The Commission also assessed the incentives of the other main supplier of sensor to increase sensor prices following the merger and concluded that the merged firm's ability to raise competitors' costs will be limited. In addition, competitors on the winder market are able to start in-house production of sensors in the medium term and this would further constrain the sensor suppliers' behaviour. As a result, the Commission concluded that the proposed concentration does not raise any competition concerns.
European Commission
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