Bundeskartellamt clears acquisition by Webasto of Edscha’s convertible roof systems business

The Bundeskartellamt has cleared the acquisition of the convertible roof systems business of Edscha AG, Remscheid, by Webasto AG, Stockdorf, in the main examination phase of its merger control proceedings.

Webasto supplies the automotive industry with heating, cooling and ventilation systems as well as roof and body systems. Its annual worldwide turnover amounts to approx. € 1.6 billion. Edscha also supplies the automotive industry, mainly with body components / hinge systems and convertible roof systems. Since February 2009 the company has been in administration due to insolvency.

The Bundeskartellamt's examination under merger control law exclusively focused on the acquisition of Edscha's convertible roof systems business.

The concentration affects the European market for the development and manufacture of convertible roof systems. With Webasto, Edscha, Magna Car Top Systems GmbH and Karmann GmbH i.I. (in insolvency), a total of four suppliers are active in the European market. During the last few years the European car manufacturers have stopped their in-house production as this had proved uneconomical. Instead they invite tenders for the development and manufacture of new convertible models and subsequently award a contract to a single manufacturer for the full model life (single sourcing). The market shares of the four companies are between 20% and 30%. In spite of this high concentration, the investigations of the Bundeskartellamt have not revealed any indication of concerted practices among the companies. There is competition between the four members of the oligopoly.

The Bundeskartellamt has analysed the tendering procedures of the car manufacturers. Generally only three companies have participated in the procedures, even where tenders were invited for large quantities. Since the competitive situation does not give any indication of collusive practices between the members of the oligopoly, it is to be expected that this will also be the case if the market is narrowed down to three suppliers.

In addition, Webasto and Edscha are not the closest competitors in the market, as can be seen from their core competencies and the frequency of their meetings in the tendering procedures. Also, the competitive pressure exerted by Webasto has significantly decreased in recent years.
The concentration could be cleared after an overall assessment of these factors, because it was not sufficiently likely that it would restrict competition.

The evidence available at present indicates, however, that a further narrowing of the oligopoly as a result of another concentration would raise competition concerns.