Bundeskartellamt clears merger of French and German tank manufacturers

The Bundeskartellamt has cleared the merger between Wegmann & Co. GmbH and the French GIAT Industries S.A. The companies plan to pool the business activities of their subsidiaries Krauss-Maffei Wegmann GmbH & Co. KG ("KMW") and Nexter Systems S.A. ("Nexter") in a new 50:50 joint venture. The project affects several sectors of the armaments industry, in particular the development and manufacture of armoured wheeled and tracked vehicles as well as the conversion, modernisation and repair of armoured military vehicles.

Andreas Mundt, President of the Bundeskartellamt: "In merger control we examine whether a merger will result in a significant impediment to effective competition on the markets affected. Our investigations have shown that this is not to be expected in the case at hand, especially not with regard to the manufacture of heavy battle tanks. Security policy aspects do not feature in our merger control proceedings but are taken into consideration in export control proceedings which are carried out by the Federal Ministry for Economic Affairs and Energy. These proceedings are still ongoing."

KMW and Nexter both manufacture heavy battle tanks. However, it is clear from the authority's investigations that the merger will not have a negative impact on the procurement activities of the armed forces of the respective countries. In the armaments industry the customer, i.e. usually the state, has a great influence on the final product. This is a very specific procurement market in which security policy interests also play a role in the procurement process.

In addition to the strong position of the customers, the fact that there are a sufficiciently large number of competitors in Germany and abroad with comparable technological capabilities and product ranges was a key factor in the decision. There was also no indication of a particular degree of competitive closeness between the parties to the merger.