FAG Kugelfischer Georg Schafer AG (an operating division of INA) revealed in mid-2002 that it had signed an agreement to acquire French precision bearing maker SNFA S.A. At the time, this news was taken as simply more evidence of consolidation across the world bearing industry.

When SNFA's Jean-Francis Lamft and FAG's Dr. Gerhard Vogel signed the acquisition agreement in Paris, Dr. Vogel said, "SNFA is an excellent company that fits extremely well with our strategy of expansion in high-tech rolling bearings. It expands our Aircraft and Super Precision Bearings division and thus expands the FAG overall portfolio."

Now, however, it appears that expansion strategy is precisely what doomed the acquisition's chance of ever being completed.

All of the companies involved -- INA/FAG, SNFA, and SKF -- refused to comment to eBearing about the SNFA situation. FAG's Head of Corporate Communications, Dr. Thomas Russ, responded to our inquiries succinctly: "Unfortunately, FAG is not in a position at present to comment on the status of its relationship with SNFA."

After considerable research and dozens of interviews, eBearing has confirmed that INA/FAG did officially abandon the SNFA acquisition, perhaps as long ago as mid-December.

Not only is this the first failed bearing industry acquisition in recent memory, it is also the first to be abandoned after a formal acquisition announcement had been made.

Societe Nouvelle de Fabrication Aeronautique, or SNFA, was founded in 1952. Some of its related production dates back to 1919, however, and the dawn of the commercial aircraft industry. Headquartered in Valenciennes, France, the company also has operations in Bristol, UK, and Turin, Italy. Over 400 production workers are employed at Valenciennes alone.

The Turin operation, Somecat, produces 6mm to 65mm bearings, while SNFA Bearings Ltd. in the U.K. manufactures 65mm to 280mm bearings.

SNFA primarily manufactures high-precision bearings for machine tools, turbo pumps, radar and other helicopter, aircraft and aerospace applications. INA/FAG had planned to roll SNFA into its Aircraft and Super Precision division, which includes Barden.

With the multinational nature of the acquisition, several European Union competition ministries would have become involved. Key among them are the French Conseil de la Concurrence and the Bonn-based Bundeskartellamt, or German Federal Cartel Office.

From what eBearing could determine, it appears that SKF went to the Bundeskartellamt and filed an official objection to FAG's planned acquisition of SNFA. Reportedly, the complaint revolved around the near-monopoly, especially in many European markets, which would have been created by the combination of SNFA and FAG Aircraft and Super Precision division. We could not verify reports that a separate anti-competitive objection had also been filed in France with the Conseil de la Concurrence,

The Bundeskartellamt is an independent higher Federal authority which is responsible to the Federal Ministry of Economics. Its main task is to apply the Act Against Restraints of Competition (ARC), which was passed in 1958 and strongly controls competitive situations involving German companies. It approximate equivalent in the U.S. would be the Federal Trade Commission.

The Bundeskartellamt apparently agreed with the complaint and FAG consequently withdrew its plan to acquire SNFA.

Last week, a Bundeskartellamt spokesman confirmed to eBearing that FAG's "notification was withdrawn." He went on to say, "The Federal Cartel Office had argued that there would be a creation of a dominant position on the market for angular contact ball bearings. Due to these concerns, the notification was withdrawn."

If the Bundeskartellamt had not put an end to the plan, our sources in France indicate that the Conseil de la Concurrence would have. Established in 1986, it is a 17-member independent agency responsible for analyzing and regulating market competition. In mid-2002, there were reported objections to INA/FAG as a German company being allowed to buy a key French aerospace and defense materiel supplier. But any hopes the acquisition might be approved were dashed in September 2002 when the Conseil de la Concurrence found INA, FAG, SKF and SNR guilty of collusion and price fixing in the French market from 1993 to 1997. The four companies were fined a total of $18.7 million, and with it went any chance the Conseil might have been persuaded to allow INA/FAG any leeway in the the SNFA acquisition.

Although the Bundeskartellamt did not give eBearing an exact date for when FAG withdrew its application, it apparently happened in mid-December 2002.