Commission approves acquisition of Harman by KKR

IP/07/1356

Brussels, Belgium – The European Commission has cleared under the EU Merger Regulation the proposed acquisition of Harman International Industries Inc of the US by private equity firm Kohlberg Kravis Roberts & Co (KKR), also of the US. After examining the operation, the Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

Harman supplies audio products and electronic systems for the vehicle, consumer and professional industries. In the vehicle sector, Harman is a market leader in the design and manufacture of so-called "infotainment" systems and products for original equipment manufacturers (OEMs). Infotainment systems coordinate and integrate a broad range of information and entertainment functions and/or devices in vehicles, including GPS navigation, traffic information, voice-activated telephone, air conditioning and heating, music and films.

KKR is a private equity business whose affiliated funds have investments in a range of different businesses. One of these businesses is Avago Technologies which KKR jointly controls with Silver Lake Partners. On 1 July 2007, Avago completed the purchase of Infineon Technologies AG’s Polymer Optical Fiber (POF) business unit. As a result of this purchase, Avago is now one of the suppliers of automotive fibre optic transceivers (FOTs) that are certified for use in infotainment systems based on the MOST (Media Oriented System Transport) protocol.

The Commission therefore examined whether as a result of the proposed acquisition, KKR, via its interest in Avago, would have the ability and incentive to restrict the supply of automotive FOTs to Harman’s competitors. The Commission also examined the possible effects of Harman purchasing all of its automotive FOT requirements in future solely from Avago.

The Commission’s investigation showed that several companies are active or are currently entering the market for the supply of automotive FOTs. Customers therefore have a range of alternative suppliers, all offering MOST compatible FOTs. As demand for automotive FOTs has increased in recent years and is expected to continue to do so, even the potential loss of Harman as a customer would not alter these companies’ plans to be active in the market. In addition, as Silver Lake Partners exercise joint control of Avago, KKR is not able to coordinate the behaviour of Avago and Harman to its own advantage.

More information on the case will be available at: http://ec.europa.eu/comm/competition/mergers/cases/index/m93.html#m_4696

Auteur: Redactie Infrasite

Bron: European Commission