Bundeskartellamt prohibits RUAG / MEN merger

The Bundeskartellamt has prohibited RUAG Deutschland GmbH, Fürth from taking over MEN Metallwerk Elisenhütte GmbH, Nassau/Lahn. The merger project would have created a de facto monopolistic position for RUAG on the German market for small calibre ammunition (also called small arms ammunition) for customers in the authorities sector and military sector.

RUAG Deutschland belongs to the worldwide active Swiss armaments group RUAG, which in recent years has acquired two leading European suppliers of small armaments, the German Dynamit Nobel and Swedish Norma Precision AB. In Germany RUAG and MEN, which belongs to the MAN group, supply customers from the authorities sector such as the Police, criminal investigation offices, the courts, offices for the protection of the constitution, customs and the Federal Armed Forces with small calibre pistol and rifle ammunition of up to 12.7 mm.

Given the similarities in the types of ammunition in demand, expertise in development and manufacture, award of contracts and contracting policies, in the Bundeskartellamt’s view a uniform product market should be assumed for customer groups from the authorities sector and military sector. Hunting and sports arms, on the other hand, belong to a separate market. Due to the special technical product requirements on the domestic market and the close manufacturer-customer relations, the Bundeskartellamt, in accordance with the decision practice of the European Commission, assumes a geographic market which is limited to Germany.

The merger would further worsen competitive conditions on this market, which is already highly concentrated. If the merger were effected RUAG would be able to use MEN’s product range, which is fully certified according to the Technical Guideline and partially patented. It would therefore be in a position to fend off potential competition even more effectively than prior to the merger and to strengthen or establish an exclusive dominant position.

The decision can be appealed against before the Düsseldorf Higher Regional Court. The wording of the decision will soon be available at www.bundeskartellamt.de.