Final report of the Hearing Officer in Case COMP/M.3653 — SIEMENS/VA Tech

(pursuant to Articles 15 and 16 of Commission Decision (2001/462/EC, ECSC) of 23 May 2001 on the terms of reference of Hearing Officers in certain competition proceedings — OJ L 162, 19.6.2001, p. 21)

(2006/C 303/11)

The notified concentration

On 10 January 2005, the Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004 of 20 January 2004 (‘the Merger Regulation’) whereby Siemens AG of Germany (‘Siemens’) acquires within the meaning of Article 3(1)(b) of the Merger Regulation control of the whole of the Austrian company VA Tech AG (‘VA Tech’) by way of public bid announced on 10 December 2004.

The proposed transaction would lead to numerous horizontal and vertical overlaps in the fields of power generation, power transmission and distribution, automation & drives, rail transport equipment, metallurgy and electrical plant engineering, building technology and communal infrastructure.

The initiation of proceedings and the issue of access to key documents

At the end of the first phase of the investigation, the Commission concluded that the concentration raised serious doubts as to its compatibility with the common market and with the EEA Agreement. On 14 February 2005, the Commission therefore initiated proceedings in accordance with Article 6(1)(c) of the Merger Regulation.

On 2 March 2005 Siemens was provided with access to the ‘key documents’ in the Commission file in accordance with chapter 7.2. of the ‘Best Practices on the conduct of EC merger control proceedings’ (‘Best Practices’), as determined by the Directorate General for Competition. By letter of 16 March 2005 Siemens requested access to further documents. In particular, they considered that documents transmitted by VA Tech ought to be of particular interest for the case and should therefore qualify as key documents. In their reply of 6 April 2005, the Directorate General for Competition confirmed their view that the documents in question did not constitute key documents. It was considered that irrespective of their source, the documents requested did not constitute substantiated submissions of third parties running counter to the notifying parties' views as set out as definition of key documents in the Best Practices. Siemens did not officially request me to intervene in this respect.

The issuance of the statement of objections and the procedural issue created by Voith Siemens with their request for an oral hearing: The notion of other involved parties

A statement of objections was sent to Siemens on 22 April 2005. In the following days, access to the Commission's file was granted. Siemens was asked to reply by 6 May 2005. This deadline was complied with.

Neither Siemens, nor VA Tech requested to develop their arguments in a formal oral hearing.

However, with a letter dated 6 May 2005 and registered 10 May 2005, the joint venture Siemens Voith Hydropower Generation GmbH & Co. KG (‘Voith Siemens’), between J.M. Voith AG and Siemens AG, requested in writing a formal oral hearing pursuant to Article 14(2) of Commission Regulation (EC) 802/2004 of 7 April 2004 (‘the Implementing Regulation’). They considered that, given that they might be directly affected by a remedy that Siemens might propose to the Commission, they should be considered as ‘other involved party’ in the sense of Article 11 (b) of the Implementing Regulation.

In my written response of 13 May 2005, I took the view that Voith Siemens did not qualify as an ‘other involved party’ and was therefore not entitled to request a formal oral hearing, in the presence of the Member States and of the associated services of the Commission, although they could of course request to be heard by the people in charge in writing or orally at any point in time. Thereinafter, the seller and the target of a concentration, companies which are indicated as examples for ‘parties to the proposed concentration’ in Article 11(b) of the Implementing Regulation constitute ‘other involved parties’, because they are directly and inevitably concerned by the implementation of the proposed concentration. This determines the fact that they are ‘Parties to the proposed concentration’ as expressed in the Regulation.

By contrast, it is uncertain and can only be determined at the end of a merger proceeding whether companies will be directly affected by commitments which need to be proposed by the notifying parties and have to be accepted by the Commission.

Therefore, the mere fact that the remedies agreed on in the context of a merger proceeding might have an impact on a company cannot justify that the latter qualifies as an ‘other involved party’, since they do not fall under the denomination of ‘Parties to the proposed concentration’

The market test

On 25 May 2005, Siemens offered commitments which were slightly amended on 7 June 2005. The market test of the proposed undertakings has been generally positive.

I have not been asked to verify the objectivity of the enquiry.

The further requests for access to documents also in relation to the notion of other involved parties.

By letter to the relevant Commission service dated 9 June 2005 and by letter to me dated 22 June 2005, SMS Demag AG, and its parent company SMS GmbH (‘SMS’) requested access to the case file. This request was rejected by the Directorate General for Competition on 22 June 2005 on the ground that SMS was recognized as an interested third party and not as an ‘other involved party’ in the sense of Article 11(b) of the Implementing Regulation and was therefore not entitled to have access to the file under the Implementing Regulation.

By decision of 6 July 2005 pursuant to Article 8 of the Hearing Officer's Mandate, I confirmed the point of view taken by the Directorate General for Competition on the grounds that the mere fact that the remedies envisaged in the context of a merger proceeding might have an impact on a third company could by no means justify that the latter qualifies as an ‘other involved party’ in the sense of Article 11(b) of the Implementing Regulation.

This is confirmed by whereas 11 of Regulation 802/2004 according to which, upon request, other involved parties must be granted the opportunity before notification to discuss the intended concentration informally with the Commission. This shows that the legislator acted on the assumption that the identity of an ‘other involved party’ results from the intended concentration itself, this being determined before potential remedies are proposed. Accordingly, the qualification of a company as an ‘involved party’ cannot depend on the manner in which the remedies eventually proposed affect certain companies.

Notwithstanding the above, SMS was provided with a non-confidential version of the Statement of Objections and was given the opportunity to comment thereon.

Furthermore, SMS received non-confidential versions of the commitments in the context of the market test, insofar as they related to the metallurgical markets in which SMS have an interest.

Therefore, I take the view that SMS had ample opportunity to state its views during the proceeding.

On 24 June 2005 Siemens requested access to the file for non-confidential documents received by the Commission since the statement of objections. The company was provided with the opportunity of obtaining access to these documents on 1 July 2005.

In the light of the above, I consider that the rights to be heard of all participants to the present proceeding have been respected.