Giesecke & Devrient and Bundesdruckerei clear regulatory hurdle

06/11/14

German document producers Giesecke & Devrient (G&D) and Bundesdruckerei have cleared the required regulatory hurdles following an in-depth examination into their proposed joint venture by the Bundeskartellamt.

In May this year G&D and Bundesdruckerei signed a contract to establish a joint venture which is to operate under the name Veridos. The aim was to bundle their international businesses in the area of secure identification, such as passport and ID card systems for governments.

The new company is to be headquartered in Berlin. Bundesdruckerei and Giesecke & Devrient will, however, continue to independently pursue business in Germany, their business activities in the private sector market and in banknote printing.

Giesecke & Devrient will hold a 60% share in Veridos and Bundesdruckerei 40%. In addition to its headquarters in Berlin, Veridos will also have an operating facility in Munich, a production site in Greece and other subsidiaries in Canada, Mexico and Brazil and will operate independently on the international market.

The supervisory bodies of both companies, the G&D shareholders and the Federal Ministry of Finance as owner of Bundesdruckerei all approved the establishment of this joint venture. And now, following this latest announcement, the investigation into any possible cartel has been cleared.

Andreas Mundt , President of the Bundeskartellamt commented: "For security reasons, in Germany all contracts relating to passports, identity cards and electronic residence permits are awarded by the Federal Ministry of the Interior to Bundesdruckerei without a tender procedure. The investigations have shown that the supply of individual components by third companies is also subject to close coordination between Bundesdruckerei and the competent government agencies.This practice of awarding contracts is not likely to change in the short and medium term. The establishment of the joint venture is thus not expected to significantly impede effective competition."

G&D's sales revenue in 2013 amounted to about 1.75 billion euros of which 90% was achieved abroad. Bundesdruckerei, which since 2009 has again been wholly owned by the state, produces documents and devices for secure identification and offers related services. In 2013 its worldwide sales revenue amounted to approx. 398 million euros of which more than 90 % was accounted for by sales in Germany.

The Bundeskartellamt's investigations have shown that both under a worldwide and Europe-wide market definition of its foreign business, the joint venture will not achieve a critical size under competition law. Also in Germany, where contracts for ID documents are awarded in public procurement procedures, the merger is not expected to result in a significant impediment of competition.

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G&D and Bundesdruckerei cleared to join their foreign secure identity businesses
G&D and Bundesdruckerei cleared to join their foreign secure identity businesses

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