CASE No COMP/M.3099 : Areva / Urenco / ETC JV

Catherine B.

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CASE No COMP/M.3099 : Areva / Urenco / ETC JV

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Abstract

In its decision of the 6th October 2004, the European Commission has assessed the compatibility with the common market of the concentration of two firms from the nuclear industry sector, following the procedure laid down in the merger regulation. This concentration was proposed by the French company, Areva (Société de participations du Commissariat à l'Energie atomique SA) and aimed at the creation of a joint venture, by a common control of ETC (Enrichment Technology Company Limited), a British undertaking which used to be wholly controlled by the British holding, Urenco Limited.
In this case, the Commission assesses the potential effects of this concentration on competition, since it raises serious doubts about the compatibility of this operation with the common market.
In order to comment this case, we will summarise the facts at stake, examine the arguments of the commission and its conclusion. We will also have a closer look at the remedies proposed before weighing the advantages and drawbacks of the Commission's proposition.

Introduction
Summary of the facts
Arguments of the European Commission
Reasons for the decision
The nature of the proposed remedies
Advantages and disadvantages of what is proposed by the Commission
Conclusion
Bibliography

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[...] But regarding the characteristics of the especially in the nuclear sector (high costs, long time, ) and the current situation (potential outcomes from Areva's R&D activities will only have effects in the long-run), it results that for the market of equipment there are no doubt about the compatibility of the merger and the common market all the more as Areva is using a declining technology and would be less and less efficient as time goes by. The situation is slightly different in terms of the supply of enriched uranium, where the Commission affirms to have “serious doubts related to the concentration as notified by the parties”.[17] To justify its position, the Commission first examines the market shares of the companies present on the market and then analyses the potential impact of the concentration on competition. [...]

[...] Nevertheless, the Commission seems to continue adopting its hostile attitude towards the pretended efficiency of a concentration, arguing that the efficiencies presented by the parties as a justification of the merger are seldom consistent once the merger occurs.[22] But if the Commission does not analyse the efficiencies considered by the parties especially Areva's access to a more efficient technology at a lesser cost it is because before the end of its investigation, it has received commitments from Areva and Urenco which have removed its doubts Reasons for the decision The Commission has decided the commitments were sufficient to remove the serious doubts about the compatibility of the concentration with the common market. [...]

[...] The Commission first focuses on the European market and according to its data, the market shares of Areva and Urenco remain, as a whole, stable for a decade (as sowed by the figure below). From this, it can be deduced that there is little pressure from outside companies. Figure 1 Source. Case No COMP/M.3099. (p. 17) However, the Commission also analyses the geographical repartition of market shares of these four supplying firms and the variations of the market shares according to the regions seem to acknowledge the thesis of different regional markets. [...]

[...] Nevertheless, the national authorities of France, Germany and Sweden have decided to refer this case to the Commission, following the possibility laid down in article 22 of the merger regulation.[6] It is true that the merger examined here has no community dimension: Urenco does not have an aggregate Community-wide turnover of more than ECU 250 million and neither Areva nor Urenco achieve more than 2/3 of its aggregate Community-wide turnover within one and the same Member-state. But the Commission has accepted to review it and initiated the first phase of the proceedings on April 2004. [...]

[...] Such an approach can bring about some negative side-effects by limiting the competitive evaluation to a “calculation of post-merger market shares”. Moreover, the definition of the relevant market should only be a first step, which should be followed by a more consistent one, assessing the competitive position of the companies in the defined market. e.g. Bishop and Walker, op. cit., note 10, p.261-262. Ibid., p.52. Case No COMP/ M.3099, op. cit., note §143. This is one factor considered to assess the possibility for a concentration to lead to [...]

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