Akzo/Courtaulds
The European Commission has decided to clear the acquisition of the British firm Courtaulds plc by Akzo Nobel NV of the Netherlands, subject to commitments by the two firms to divest their interests in aerospace coatings and sealants, thus eliminating any overlap in these markets. The Commission’s investigation found that the activities of Akzo and Courtaulds are largely complementary, except in these two areas. In aerospace coatings, Courtaulds and Akzo Nobel, through its ADAF joint venture with Dexter of the US, are the two leading suppliers in Europe. Their combined market share would amount to almost 80 per cent in the European Economic Area (EEA). In the market for aerospace sealants, in which Courtaulds is the world leader with a market share of 65 per cent, the concern was related to ADAF’s participation in an R&D project which seeks among other things to develop sealants that could compete with Courtaulds’ current products.
Akzo Nobel has undertaken either to divest the whole of Courtaulds’ worldwide aerospace coatings and sealants business to an independent purchaser, who will need to be approved by the Commission, or to propose a sale of all its interest in ADAF to its current partner Dexter. The Commission will give its consent to this alternative remedy if it is satisfied that it is equally effective in ensuring the maintenance of competitive conditions in the aerospace coatings market in the EEA.
Akzo Nobel’s general counsel Rienk Arnold instructed Freshfields, whose team was headed by John Davies in Brussels, supported by Howard Cartlidge, Kate Cowdell, Florence Melchior and Alicia van Cauwelaert. For Courtaulds, general counsel Russell Miller instructed Slaughter and May’s John Boyce and Mark Israel.

Price-Waterhouse/Coopers & Lybrand
The EU Commission has formally cleared the notified merger between Price Waterhouse and Coopers & Lybrand following a full investigation centred on the risk of dominance in the market for audit and accounting services to large companies. The Commission found that while this market was characterised by many elements conducive to collective dominance, there was no conclusive evidence that this would develop. Elizabeth McKnight and Stephen Wisking of Herbert Smith were lead advisers to both firms in Europe, with David Hall and Michael Cutting also being retained by Coopers & Lybrand. In the US, Bill Kolasky of Wilmer Cutler advised Price Waterhouse, while Jim Kobak of Hughes Hubbard & Reed advised Coopers & Lybrand. Among the other jurisdictions where clearances were obtained, Neil Campbell of McMillan Binch advised both firms in Canada and Jens Drolshammer of Homburger Rechtsanwälte advised in Switzerland, as did Roger Featherstone of Mallesons in Australia and Michael Katz of Edward Nathan & Friedland in South Africa.

Air France
Air France has lost out in a European court battle with some of its competitors, who claimed that the Commission had failed to justify its 1994 approval of Fr20 billion in state aid to the beleaguered national carrier. The European Court of First Instance upheld the complaints and reversed the Commission’s approval of the aid — finding that it had failed to provide sufficient legal justification for its decision to approve Fr11.5 million in aid to buy 17 new aircraft, and that the Commission had also failed to consider the effect of the aid on competition on long-haul routes in and out of Europe. Air France was represented by Gide Loyrette Nouel, with a team led by competition partner Olivier d’Ormesson. British Midland’s Kevin Dudley hired Hammond Suddards, with a team consisting of Brussels-based Konstantinos Adamantopoulos and Jonathan Branton. BA, KLM and SAS instructed Cleary Gottlieb Steen & Hamilton, whose team was led by Romano Subiotto in Brussels.

Cartonboard
The European Court of First Instance has largely upheld the fines levied by the Commission on 19 companies involved in a cartel in the cartonboard market — one company has had its fine annulled completely, while others have seen small reductions, the total fines imposed being reduced from Ecu 131.75 million to Ecu 120.33 million. Among those working on the case, which took four years to reach a conclusion, were Denis Waelbroeck of Liedekerke Wolters Waelbroeck & Kirkpatrick, representing CEPI Cartonboard, Thomas Jestaedt of Boesebeck Droste, representing Weig, Jacques Buhart of Coudert, representing Cascades, Massimo Merola of Studio Legale Pappalardo, representing Sarrio-Saffa, Bonifacio Garcia Porras of Bufete Cuatrecasas, representing Enso Española, Tony Woodgate of Simmons & Simmons, representing MoDo/Iggesund, and Giuseppe Scassellati of Cleary, Gottlieb, Steen & Hamilton, representing SCA Holding.

Snecma/Messier Dowty
The European Commission has authorised the takeover by the French state-owned company Snecma, specialised in jet engines, of Messier Dowty, which was jointly controlled with the UK company IT Group. In the same operation, Snecma also acquired control of the landing gear overhaul services business of the IT Group. Messier Dowty holds a market share for landing gear of approximately 35 per cent worldwide. In the view of the Commission, the operation did not create or strengthen a dominant position given the absence of additional market share, the existence of strong competitors and the presence of customers – namely aircraft manufacturers – with significant buying power. Snecma general counsel Bruno Giuliano called in Slaughter and May, whose William Sibree was assisted by Diane Somborn, while Andrew Renshaw of Freshfields in Brussels looked after IT Group.

MCI/WorldCom cleared
The European Commission recently cleared the US$37 billion merger between MCI Communications and WorldCom, followed a few days later by the US Department of Justice. Both decisions specify that the companies must divest MCI’s Internet assets to an approved buyer, the idea being to ensure the buyer provides effective competition to the merged company. Britain’s Cable and Wireless plc agreed to buy both MCI’s wholesale Internet assets and, more recently, the retail side of the business. Without the divestment, the two companies would have had a share of over 50 per cent of the global Internet backbone market. With approval from the Federal Communications Commission and four US states still pending, the two companies say they expect to close the deal by the end of the summer.
Some of MCI’s competitors were sceptical about the clearances. “WorldCom started out saying there was no problem on the Internet; then they said only a ‘minor’ fix would be needed; and now they are bowing to complete divestiture. It has been a gratifying progression,” said William P Barr, executive vice president and general counsel for GTE, speaking just after the Commission decision. But he remained concerned about the precise conditions the Commission had set: “GTE’s remaining concern is that the European Commission build adequate safeguards to ensure that the spin-out of MCI’s Internet business will be durable and fully effective.” MCI officials, meanwhile, say the Internet will continue to be a strategic priority for the merged company. “While it may have a limited starting base, it won’t limit growth,” said MCI’s acting CFO Michael Rowny.
In Brussels, MCI worked with Freshfields partner Rachel Brandenburger, assisted by David Broomhall, and Clive Stanbrook of Stanbrook & Hooper, assisted by Gordon Mackenzie and Jabier Berasetegi. Tony Epstein of Jenner & Block looked after the clearance in Washington.