AEROSPACE/DEFENCE: COMMISSION CLEARS EADS GROUP - THE NEW WORLD No 3.

The news of the deal's clearance comes after last month's extended deadline for the Commission to rule on the deal after the firms offered undertakings to remove competition concerns. Company sources earlier said that talks with the Commission had been narrowed down to mere details and were optimistic the merger would get immediate clearance. EADS announced in April it was forming a 50-50 aircraft joint venture with Alenia Aerospazio, a unit of Italy's Finmeccanica. But despite its growing dimension, with CASA getting the go-ahead to join EADS in March, the deal has avoided an in-depth probe.The Commission nevertheless identified competition concerns in the space market, relating to the firms' market positions in two satellite equipment markets - antenna reflectors and central tubes - which were successfully addressed by the companies. EADS will be active in commercial aircraft, telecommunications equipment, commercial and military helicopters, space, guided weapons, drones or unmanned air vehicles used for military operations, military aircraft and defence electronics.--With its strength in making large commercial aircraft, EADS will be active at the prime contractor level, since it will combine 80% of the shares in European aircraft consortium Airbus. It will also make some equipment for commercial aircraft manufacturers. However, at the prime contractor level the merger will not affect competition conditions, since the UK's BAe Systems, which owns the remaining 20% in Airbus, maintains its veto rights vis-a-vis all strategic decisions at the European consortium, and since the proposed transaction has no impact on the work share distribution between the Airbus partners. BAe Systems has been invited to join the new company, however. There is also no indication that the new formation would create a dominant position on the upstream equipment markets. EADS will also be active in a number of defence markets, where it will act both as a prime contractor for defence products and an equipment supplier. In defence markets, a distinction is made between those countries which procure new armaments through national or international programmes, and those countries which purchase mostly existing products through export contracts. In programme markets, the EADS deal does not appear to raise competition concerns, essentially because the parties will remain subject to the important countervailing buying power of national Ministries of Defence and, for...