Completed acquisition by General Electric Company of AGFA-N.V's non-destructive testing business

Affected market: Non-destructive testing equipment

No. ME/1498/03

Please note that the full text of the decision can be downloaded from the link on the right . What follows are extracts regarding the parties, the transaction, jurisdiction, assessment, and decision.

The OFT’s decision on reference under section 22 given on 12 January 2003

PARTIES

General Electric Company (GE) is a diversified industrial corporation active in a variety of fields such as aircraft engines, power systems, medical systems and financial services.  GE is active in the non-destructive testing (NDT) business through Panametrics.

AGFA-N.V's non-destructive testing business (AGFA NDT) is part of AGFA Gevaert NV.  It develops, produces and distributes a wide range of analogue and digital testing equipment designed to test all types of materials without deforming or damaging them.  AGFA NDT sells ultrasonic products including portable and stationary flaw detectors, thickness gauges, hardness testers and testing systems for industrial applications under the Krautkramer and StressTel brand names.  AGFA NDT's UK turnover for 2002 was approx (see note 1).

TRANSACTION

GE through its wholly-owned subsidiary GE Aircraft Engines (GEAE) acquired on 31 December 2003 all of the assets and operations of AGFA's non-destructive testing business.

The transaction was notified by GE on 25 March 2003.  The administrative deadline is 26 January 2004.

JURISDICTION

As a result of this transaction GE and AGFA NDT have ceased to be distinct.  The parties overlap in the supply of non-destructive testing equipment and the share of supply test in section 23 of the Enterprise Act 2002 is met.  A relevant merger situation has been created.

ASSESSMENT

The parties' overlapped in the supply of non-destructive testing equipment.  Post-merger, the parties had high shares of supply of the European portable ULS testing device and transducer segments.  Third parties have commented that the parties are each others' closest competitors.  Barriers to entry on a smaller scale do not appear to be insurmountable, but there do appear to be barriers to expansion to a scale similar to the parties and there does not appear to be any significant level of countervailing buyer power.

Following the Article 22 requests, the European Commission has investigated this merger.  The Commission's review highlighted serious concerns in the market for portable ultrasound NDT devices.  GE offered to divest the ultrasound NDT business of its subsidiary Panametrics.  This divestment effectively removes the overlap between the two parties, ensuring that there would be no substantial lessening of competition resulting from the merger.  Although GE's share of supply has increased post-merger, given the small proportion of NDT sales that GE companies purchase, this growth in share is unlikely to lead to any vertical concerns.

It should also be noted that the divestment of Panametrics to RD Tech would not qualify as a separate UK merger.

Given the divestment remedy accepted by the European Commission and which has already been implemented, the OFT does not therefore believe that there is a significant prospect that the merger would substantially lessen competition within a market or markets in the United Kingdom for goods or services.  Nor does it believe that there is a credible alternative view that the merger might substantially less competition.

DECISION

This merger will therefore not be referred to the Competition Commission under section 22(1) of the Act.

NOTES

1. Details excised at the request of the parties for reason of commercial confidentiality.

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