On 20 March 2019, the European Commission approved the acquisition of the whole of Asco Industries N.V., Asco Management NV and Immobiliere Asco NV, through the holding company S.R.I.F. NV (‘Asco’), by Spirit AeroSystems Holdings, Inc. (‘Spirit’), subject to condition.

Spirit, headquartered in the US, designs, manufactures and sells aerostructures for commercial and military aircraft. Asco, headquartered in Belgium,is active in machining, treatment and assembly of hard metal, steel and aluminium alloys, composites and the sale of components and sub-components for the aerostructures of commercial aircraft and military aircraft.

According to the Commission, the proposed concentration would raise no competition concerns regarding vertical supply relationships or horizontal overlaps in the same markets, since, in markets where the companies’ activities overlap, Spirit and Asco are not close competitors. Moreover, in markets where the companies’ activities are at different levels of the supply chain, the merged entity would have neither the ability nor the incentive to shut out competing suppliers or customers.

However, the Commission was concerned that the proposed acquisition, as originally notified, would significantly reduce competition in the worldwide market for the supply of slat systems in general and of slats in particular, since it would have increased the likelihood of companies to coordinate their behaviour.

Slat systems allow the wing of an aircraft to operate at a higher “angle of attack” (i.e., the angle at which the wing meets oncoming air). This improves the lifting ability of the wing and enables aircraft to fly at lower speeds, during take-off and landing. Slat systems include several components such as slats, slat supports, and racks and pinions.

The companies operate at different levels of the supply chains for slat systems. In particular, Asco is a member, together with Sonaca and BMT Eurair, of a joint venture named Belairbus, which is active in the development and production of slat systems for all the main commercial Airbus planes. The joint venture also manages the commercial, financial and administrative aspects of contracts for the supply of slat systems to Airbus. Sonaca, one of Asco’s partners in Belairbus, is also a leading supplier of slats and the only competitor of Spirit in this market. Therefore, by acquiring Asco, Spirit would have also become a shareholder of Belairbus, alongside its sole competitor for slats, Sonaca. According to the Commission, this would increase the likelihood of coordinated behaviour between Spirit and Sonaca, the only two worldwide suppliers of slats.

In order to address the Commission’s competition concerns, Spirit offered to structurally modify the set-up of Belairbus to permanently eliminate its role as a commercial and technical platform for negotiations with Airbus. Therefore, all future contract negotiations will be carried out bilaterally and independently between each supplier and Airbus. Moreover, the companies have set up mechanisms to destroy any existing commercially sensitive information of Sonaca held by Asco.

The Commission concluded that the proposed acquisition, as modified by the commitments, would no longer raise competition concerns.