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European Law Monitor NewsMergers: Commission clears joint venture between AREVA NP and Mitsubishi Heavy Industries

The European Commission has cleared under the EU Merger Regulation the creation of a joint venture between the French company AREVA NP and Mitsubishi Heavy Industries (MHI) of Japan, both active in the nuclear industry. The joint venture will be active in the design and manufacture of 'nuclear islands', the steam generation units of nuclear power plants. The Commission concluded that the proposed transaction would not significantly impede competition in the European Economic Area (EEA) or any substantial part of it.

AREVA NP is active in the design and manufacturing of nuclear reactors and provides services related to nuclear reactor operation. AREVA NP is itself a joint venture co-owned and co-controlled by AREVA (66%) and Siemens (34%). The creation of the AREVA NP joint venture was authorised by the Commission in 2000 (see IP/00/1414) .

MHI is active in power structures • including nuclear power equipment and services - shipbuilding and ocean development, aerospace systems, steel structures and assorted types of industrial and other machinery.

The new joint venture would be responsible for the design, licensing, certification, marketing, sale, construction and commissioning of a single type of nuclear island to be installed in nuclear power plants.

Nuclear power plants consist of two main components: the 'nuclear island' including the reactor, on the one hand, and the 'conventional island' on the other. The 'nuclear island' generates steam using nuclear technology, whereas the 'conventional island' uses this steam to produce electricity through turbines and generators. The 'conventional island' is typically housed in a building separate from the 'nuclear island'.

The 'nuclear island' to be produced by the joint venture would be a mid-range pressurised water reactor with a power output of 900-1200 Megawatts electrical (MWe). Both parent companies would continue to offer nuclear islands with higher capacity independently of each other. The co-operation within the joint venture would not include ancillary products (such as maintenance and repair services, fuel assemblies and conventional islands). These products would also be supplied independently by AREVA NP and MHI.

The Commission found that the activities of AREVA NP and MHI are geographically complementary, since AREVA NP is mainly active in the EEA, and MHI in Japan. The joint venture and its parent companies would continue to face competition from several competitors with worldwide activities • GE-Hitachi Nuclear Energy and Toshiba/Westinghouse • and a number of producers of 'nuclear islands' with regional footprints such as Atomstroyexport (Russia), Doosan/KOPEC (South Korea) and AECL (Canada).

The Commission also investigated the risk of the joint venture being used to coordinate the competitive behaviour of the parent companies. Considering the fact that the activity of the joint venture would be limited to one particular type of nuclear island which is technically different from the nuclear islands offered by AREVA and MHI respectively and the fact that the parties to the joint venture are active in different parts of the world, the Commission considered such coordination unlikely.

Further information on the case will be available at: