The European Commission (EC) has approved the proposed MAN takeover of Scania.

In a statement the EC said that, “after an investigation of all markets affected, the commission concluded that the proposed transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.”

Competition commissioner Neelie Kroes said: “The commission is satisfied that competition on price and technology will remain strong in the future on the bus and truck markets, in particular considering the increasing importance of environmentally-friendly technologies in this sector.”

The EC recognised that the merger combines two of the largest European truck and bus manufacturers. However, it found that European bus and truck markets would remain competitive even after the proposed acquisition, because the merged entity would still face strong competition from a number of other important manufacturers such as DaimlerChrysler, Volvo, Iveco and DAF.

Scania is still treating its prospective takeover as hostile while MAN welcomed the EC decision. In a statement Håkan Samuelsson, MAN CEO, said: “This favourable decision on the part of the EU is a decisive signal and a clear endorsement of our project of forging a new European champion through the combination of MAN and Scania. We have the go-ahead from all authorities in the European Union – and it’s now up to Scania’s shareholders. We are confident that the intended combination will materialise.”

Scania shareholders have until the end of January to decide whether to accept MAN’s offer. Convincing major shareholder Investor is the key but Investor has said that the value of the offer is not high enough. Samuelsson said yesterday that an extension of the offer period beyond 31 January, 2007 is not planned.

As competition for the sale of buses and trucks still takes place to at least a certain extent at national level, the commission assessed a large number of markets in countries within the EEA where MAN and Scania are both active. The commission focused its investigation on those markets where the merger would have the largest impact.

Swedish market for city buses

On the Swedish market for city buses, the combination of MAN and Scania would lead to a relatively high market share for the merged entity. The commission examined whether customers would be adversely affected as a result of the proposed merger, for example through price increases for city buses or reduced competition for environmentally-friendly bus technologies in Sweden. The commission concluded that MAN’s proposed acquisition of Scania as an independent supplier of city buses is unlikely to significantly impede competition in this market, which is currently very competitive. The presence of several large buyers such as the pan-European bus operators Arriva, Keolis and Veolia (formerly Connex) and competition in Sweden from well-established suppliers Volvo, DaimlerChrysler (with significant market shares), as well as other smaller bus manufacturers, ensures that competition would continue to be effective in this market.

Iberian markets for inter-city buses and tourist coaches

In the Spanish and Portuguese markets for inter-city buses and tourist coaches, MAN and Scania would also have high market shares. However, the commission’s investigation showed that not only are DaimlerChrysler, Volvo and Iveco well-represented in these markets, but also that there are a number of local bus manufacturers who buy ready-made chassis, build the bus body themselves and sell the finished buses to end-customers. These body-builders have a strong local presence and are close to the customers. The combined presence in Spain and Portugal of large integrated bus manufacturers and local body-builders allowed the commission to conclude that the proposed merger would not reduce competition in these markets.

Austrian market for heavy trucks

In the Austrian market for heavy trucks the combined MAN and Scania would be the largest supplier by far. However, DaimlerChrysler, Volvo, DAF and Iveco are all present in Austria and there are no capacity constraints which would prevent these competitors from increasing their sales if MAN and Scania were to try to raise prices after the proposed merger.