Schneider Electric SA (Schneider), a company incorporated under French law, is the parent company of a group engaged in the manufacture and sale of products and systems in the electrical distribution, industrial control, and automation sectors. Incorporated under French law, Legrand SA is a company that specializes in the manufacture and sale of electrical equipment for low-voltage installations. Schneider launched its bid to acquire Legrand in a $6.43 billion purchase offer in January 2001. In accordance with the requirements in the Merger Regulation, Legrand notified the Commission of Schneider's proposal to make a public exchange offer for all shares of Legrand held by the public. Due to French merger rules, Schneider proceeded with its purchase of Legrand before the Merger Task Force ruled on the propriety of the merger. In August 2001, the Commission decided that the transaction would create an anticompetitive dominant position in a number of key markets. The CFI then considered the Schneider case under new fast track provisions designed to hasten judicial review of such merger decisions.
1. Schneider and Legrand did not sell the same product. Why was their combination a threat to competition?
2. Why would a combination of parties with "complementary" products create a threat to competition? How would this disadvantage competitors with only one of the complementary products?
3. What implications does this have for a maker of a personal computer operating system acquiring a company that sells software applications?