The United States Federal Trade Commission (FTC) has finally approved INA Holding's
takeover of FAG Kugelfischer, but with several important provisions.
INA now intends to move quickly and finish the acquisition. CEO Juergen
Geissinger said, "We'll now make sure that the shareholders get their money
as soon as possible."
The takeover will create the world's second-largest bearing manufacturing
company, behind SKF (Gothenberg, Sweden).
The FTC claimed jurisdiction in the merger, along with the European Union Competition
Commission, because both INA and FAG have operations in the United States.
Cartridge Ball Screw Support Bearings
The Commission's investigation focused on cartridge ball screw support bearings (CBSSB).
CBSSBs are bearings used in machine tools both for positioning the workpiece and
the tooling. INA and FAG are the world's only manufacturers of CBSSBs.
In its investigation, the FTC determined that, if INA acquires FAG as it stands, INA
will become a monopoly in the world CBSSB business. Thus, the acquisition violates both
Section 5 of the FTC Act (15 USC § 45) and Section 7 of the Clayton Act
(15 USC § 18).
In order to satisfy the FTC, it ruled INA must divest FAG's CBSSB business in its
entirety to SKF within 20 days after it begins the FAG acquisition. Everything from
patents to price sheets, and everything in between, must be turned over to SKF. In
addition, FAG must provide seamless transfer of production to SKF, even if
it means producing the products for SKF at its own variable cost of production
for up to six months. INA and FAG must supply personnel and training at no cost.
Finally, INA and FAG must stop using any catalog part numbers currently used by
FAG to identify CBSSBs, and turn over all customer lists and contact names.
FAG Relationship with NTN
The FTC also determined that FAG's relationship with NTN must be watched for
possible abuse. Although the recent alliance of FAG and NTN has not yet seen
any joint activities develop, the FTC is concerned that INA will continue with
the, "possibility of a future global three-firm alliance, and given that
such joint venture activities may not otherwise trigger Hart-Scott-Rodino reporting
requirements, the Commission's Order requires INA and FAG to provide prior notice
to the Commission before entering into any such joint venture activities with NTN
affecting North America."
The proposed Consent Agreement has been placed on the public record for
30 days for comment. After 30 days, the Commission will again review the
Agreement and decide if it should withdraw from the proposed Agreement
or make the final Decision and Order.
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