06 Sept 2017 Cases

Compass Lexecon Advises During EC Investigation of Knorr-Bremse's Proposed Acquisition of Haldex AB

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In July 2017, the European Commission ("EC") announced an in-depth investigation into the $692 million transaction by which the German company Knorr-Bremse would acquire the Swedish firm Haldex. Knorr-Bremse and Haldex are two of the world's largest manufacturers of brake systems and related components for commercial vehicles. Haldex had been pursued for over a year, with three parts suppliers making offers. Knorr-Bremse won the bidding war, whereas Haldex would have preferred ZF Friedrichshafen in order to conclude an easier deal with limited antitrust concerns.

The EC expressed concerns in the markets for electronic braking systems (EBS) and air disc brakes for both trucks and trailers, anti-lock braking systems (ABS) for trailers, valves, and air treatment systems, as these markets were considered to have high entry barriers. The U.S. Department of Justice had previously also expressed serious concerns regarding the acquisition and initiated an in-depth investigation in December 2016.

As a result of the concerns raised by both competition authorities, it was considered unlikely that the deal would obtain the necessary competition clearances within the acceptance period of the bid. Therefore, the Haldex Board withdrew its support for Knorr-Bremse's bid and in September 2017, Knorr-Bremse abandoned the transaction.

Compass Lexecon provided economic advice to Knorr-Bremse during the merger control proceedings by the EC, including pre-notification discussions. We assessed the competitive impact of the transaction and assisted with a proposed remedy package. The Compass Lexecon team included Jorge Padilla, Thilo Klein, Rashid Muhamedrahimov, and Agata Lewicka.

A new version of Compass Lexecon is available.