German antitrust regulators have blocked Magna International Inc.'s planned takeover of bankrupt supplier Wilhelm Karmann GmbH's roof division.
"The European market for convertible roof systems is already highly concentrated and the combination of Magna and Karmann would have led to there being only two big providers," Andreas Mundt, president of the German Federal Cartel Office (FCO), said on Wednesday.
Regulators were concerned that if they approved the acquisition, Magna/Karmann and Germany's Webasto, which recently acquired the roof unit of German supplier Edscha, would dominate the market for convertible roofs. They believed the lack of competition would lead to higher prices, Mundt said.
The value of Europe’s convertible roof business was about 600 million euros (about $733 million) in 2009.
When asked by Automotive News Europe in March whether automakers were concerned about the potential lack of competition, Guenter Apfalter, president of Magna International Austrian unit Magna Steyr, said: “What is surprising is that OEMS from Daimler to Renault, which produce convertible cars, support this deal. They say the industry needs a strong company in the roof business with a strong financing backing.”
Magna won a bidding contest against Spanish supplier CIE Automotive to become the front runner to acquire Karmann's German roof unit, which includes shares in an operation in Zary, Poland, along with a factory in Osnabrueck, Germany.
Magna ranks No. 4 on the Automotive News Europe list of the top 100 global suppliers, with sales to automakers of about $23.3 billion in 2008.
Douglas A. Bolduc contributed to this report