September 27, 2003

By: Mark Harris
Website: http://www.bearing-n-bearings.com

Commission clears takeover of German industrial bearings maker FAG Kugelfischer by rival INA

The European Commission has authorised the acquisition of German industrial bearings manufacturer FAG Kugelfischer Georg Schäfer AG by rival INA Holding Schaeffler KG, also of Germany. The merger will create the world's second biggest industrial bearings company behind SKF AB of Sweden. But the companies' activities are largely complementary and they will be faced with sufficient competition and significant purchasing power from the automotive and other industries.

INA Holding is the ultimate holding company of the INA Group, which is active world-wide in the development, production and sale of precision components for the automotive and other industries, including anti-friction bearings. FAG is also active world-wide in the design, manufacture and sale of a wide range of anti-friction bearings and individual components.

The Commission's market investigation showed that the companies' activities are largely complementary. This is mirrored in their different customer basis; INA concentrates on the automotive sector whereas FAG has other types of industrial customers, all with very specific requirements. The only overlaps are in the field of certain ball bearings and roller bearings.

Regarding ball bearings as well as some specific products which constituted separate markets, namely water pump bearings and cylindrical roller bearings, the Commission looked at distinct customer segments, such as the Original Equipment Manufacturers/Suppliers (OEM/OES) and the Independent Aftermarket (IAM), on the one hand, and automotive and industrial customers, on the other hand. The investigation established that European customers see the bearing markets for automotive and industrial OEM/OES as world-wide, to the extent that they can obtain supplies either locally or through imports. In fact, EU imports have increased by 46% since 1997 when anti-dumping measures against bearings imports from Japan were lifted. The geographic dimension of the IAM market was left open in this case because there would be sufficient competition whichever definition was adopted.

The market investigation also confirmed that although the combined company would embrace a greater range of bearing markets, this would not adversely affect effective competition.

The Commission also took into consideration the fact that bearings is a mature industry with declining prices and where, therefore, economies of scale are important and customers enjoy buyer-power. In addition to SKF, INA will also face continued competition from other significant producers based in Japan and the United States.

Consequently, the Commission concluded that the merger would not result in the creation or strengthening of a dominant position in any product or geographic markets considered.

About The Author:

Mark Harris is a successful author and regular contributor to http://www.bearing-n-bearings.com.  Keep things running smoothly with ball bearings, roller bearings, ball thrust bearings and tapered bearings.