Europe clears acquisition of Morpho Detection by Smiths, subject to conditions
Staff Writer |
The European Commission has cleared under the EU Merger Regulation the proposed acquisition of Morpho Detection, the threat detection equipment business of Safran of France, by Smiths of the UK.
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The clearance is conditional on the divestiture of Morpho Detection's explosive trace detection business.
The Commission had concerns that the merged entity would have faced insufficient competitive pressure from the remaining players in the European market for the supply of explosive trace detectors to airports and in the worldwide market for the supply of explosive trace detectors to other end-users.
Following the takeover there was a risk of price rises and less innovation for explosive trace detectors.
Smiths and Morpho Detection also develop and manufacture hold baggage explosive detection systems, which are used mostly in airports to screen baggage checked in to be carried in the hold of the aircraft.
However, the Commission considers that the merged entity would still face competitive pressure from a sufficient number of players active in this market in the European Economic Area.
The Commission also found that there will be sufficient competition for cabin baggage explosive detection systems, which both Smiths and Morpho Detection, as well as several other competitors, are currently developing.
New developments in these detection systems aim to speed up airport checkpoints for passengers.
To address the Commission's competition concerns, Smiths offered to divest Morpho Detection's global explosive trace detectors business. The divestment will fully remove the overlap for explosive trace detectors resulting from the merger as initially notified.
The purchaser of the divested explosive trace detector business will be able to replace Morpho Detection on the market. It will exert the same level of competitive constraint on Smiths with regard to both the supply of explosive trace detectors to airports in Europe and to the supply of non-aviation customers worldwide.
These commitments address all competition concerns identified by the Commission. The Commission's decision to approve the transaction is conditional upon full implementation of the commitments. ■