On January 17, 2022, the German Federal Cartel Office (“FCO”) published a case summary on its two consecutive in-depth-investigations of automotive supplier Dana Inc.’s (“Dana”) proposed acquisition of (a portion of) Modine Manufacturing Company’s (“Modine”) light-vehicle thermal business. The parties first notified the acquisition in December 2020. When the FCO informed the notifying parties about its competitive concerns, Dana and Modine withdrew their merger notification and subsequently re-filed the transaction with a limited scope in June 2021. Following another in-depth review of the FCO, the parties definitely abandoned the merger and withdrew also the modified merger notification in October 2021, before the FCO came to a conclusion as to whether the modified transaction would have raised competitive concerns.
Both parties manufacture and supply, inter alia, thermal systems for the automotive industry such as oil coolers. Oil coolers for vehicles are available in various designs: heat can be dissipated by the cooler directly to the air (air-cooled oil cooler) or first to a water-based liquid (liquid-cooled oil cooler) and then to the air.
The FCO defined the relevant market as the European Economic Area market for liquid-cooled oil coolers for passenger cars and light commercial vehicles, where the parties’ combined market share (resulting from the transaction as initially notified in December 2020) would have amounted to 60-70%. Consequently, in its first investigation, the FCO preliminarily found that neither the car manufacturer’s buying power nor the (limited) competitive pressure exercised by internally produced and captively used coolers could have offset this market position. Dana and Modine therefore withdrew their initial filing.
Under the modified transaction filed in June 2021, Modine would have retained part of its oil cooler business. While one could wonder why the parties did not offer this modification to the transaction as a reverse carve-out commitment already during the first investigation to remedy the FCO’s concerns, the FCO noted that the modified transaction raised complex additional questions which would have gone beyond the scope of the FCO’s usual market testing to assess the suitability of remedies offered to mitigate its concerns. In particular, Modine originally intended to exit the automotive business by selling its complete light-vehicle thermal business to Dana. Accordingly, the FCO had to carefully scrutinize Modine’s incentive to continue its retained oil cooler business as a concern and whether the retained business could compete effectively with Dana’s business in the future. Further, the FCO was concerned that Modine’s detailed knowledge of the cost structure and technological capabilities of the business to be acquired by Dana would have facilitated anticompetitive coordination between the two companies. The parties definitely abandoned the transaction before the FCO could complete its investigation and finalize its assessment.
Editors: Katharina Apel and Anna Lubberger
 Dana is a global manufacturer of propulsion and energy-management solutions powering vehicles and machines, including thermal systems for passenger cars and light commercial vehicles.
 Modine is a global power-conveyance and energy-management systems manufacturer which likewise offers thermal systems for the automotive industry.