BRUSSELS -- The European Commission on Tuesday approved tire maker Continental AG's acquisition of German automotive supplier Phoenix AG, provided it sold off certain activities to safeguard competition.
The Commission said it had approved the deal after Continental agreed to make divestitures to ensure competition was preserved in the markets for air springs for commercial vehicles and for heavy steel cord conveyor belts.
The Commission had worried that in both these markets the combined firm would have a market share of well over 60 percent, while newcomers to these markets faced significant barriers to entry.
The decision came at the end of a four-month probe.
Continental promised to sell Phoenix's 50 percent stake in air spring distributor Vibracoustic GmbH & Co KG to its only other shareholder, Germany's Freudenberg, and to divest Phoenix's Hungary-based air spring production unit.
Continental also agreed to sell a wide steel cord conveyor belt production line to competitor Sempertrans, so its peer could compete across the full range of steel cord conveyor belts, the Commission said.
Continental aimed to acquire Phoenix, a Hamburg-based rubber and plastic parts manufacturer, and merge it with its ContiTech unit to create a business with annual revenues of around 2.9 billion euros ($3.7 billion).Both ContiTech and Phoenix manufacture rubber hoses, conveyor belt systems and air springs.