COMPETITION COUNCIL. Art. 33 became art. 32 by republishing the Competition Law no. 21/1996;

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1 Decision no. 101 / related to the economic concentration realized by SAFRAN SA through its subsidiary Sagem Sécurité A.S. through the acquisition of sole control over PRINTRAK International Inc. COMPETITION COUNCIL On the basis of: 1. The Competition Law no. 21/1996, republished in the Official Journal of Romania, Part I, no. 742 from August 16, 2005 (hereinafter referred to as law); 2. The Decree no. 830 from September 4, 2007 regarding the appointment of the Competition Council s President, published in the Official Journal of Romania, no. 619 from September 7, 2007; 3. The Decree no from September 6, 2006 regarding the appointment of a Vice- President of the Competition Council s Plenum, published in the Official Journal of Romania, Part I, no. 767 from September 8, 2006; 4. The Decree no from September 6, 2006 regarding the appointment of a member of the Competition Council s Plenum, published in the Official Journal of Romania, Part I, no. 767 from September 8, 2006; 5. The Decree no. 57 from February 17, 2004 regarding the appointment of the members of the Competition Council s Plenum, published in the Official Journal of Romania, Part I, no.143 from February 17, 2004; 6. The Regulation from March 29, 2004 concerning the authorization of economic concentrations, published in the Official Journal of Romania, Part I, no. 280 from March 31, 2004, with subsequent amendment and completions (hereinafter referred to as Regulation); 7. The Regulation from March 26, 2004, on organization, functioning and procedure of the Competition Council, published in the Official Journal of Romania, Part I, no. 288 of April 01, 2004, with subsequent amendments and completions; 8. Guidelines from April 29, 2004, on calculation of turnover in the cases of anti-competitive practice provided for under the art. 5(1) of the Competition Law no. 21/1996 and in the economic concentrations cases, published in the Official Journal of Romania, Part I, no. 440/ ; 9. Guidelines from March 26, 2004, on relevant market definition with a view to determining the significant market share published in the Official Journal of Romania, Part I, no. 288/ ; 10. Guidelines from March 26, 2004, on the application of the provisions of art of the Competition Law no. 21/1996 regarding calculation of the authorization fee for economic concentrations, published in the Official Journal of Romania, Part I, no. 288/ ; 11. The notification of the economic concentration submitted by SAGEM SÉCURITÉ A.S., registered at the Competition Council under no RS 83/ that became effective on ; 12. The Note of the Commission responsible with mergers and antitrust AG 464/ Art. 33 became art. 32 by republishing the Competition Law no. 21/1996; 1

2 Taking into account that: 1. Through the address registered at the Competition Council under RS 83/ , Sagem Sécurité A.S. 2 (hereinafter referred to as Sagem Sécurité ), it was submitted the notification regarding the economic concentration realized through the acquisition of the sole control over PRINTRAK International Inc. 3 SUA (hereinafter referred to as PRINTRAK 4 ) The notification became effective on Sagem Sécurité is 100% owned by Sagem Defense Sécurité, also owned 100% by SAFRAN 5. As a mother-company, SAFRAN manages the omonim group, listed on the exchange and oriented towards products and services in the defense area, group that operates internationally through it s branches, that are structured on the main lines of activity: Aerospace propulsion; Aircraft equipment; Defense Security; Communications. In Romania, the SAFRAN group is present through Sagem ORGA SRL 6 (owned 100% by Sagem Sécurité through it s subsidiary, Sagem ORGA GmbH) Sagem Sécurité is active in the field of identifying solutions based on biometry, but also in the secured identification documents and management solutions for identification area. 3. PRINTRAK, the biometric unit of the Motorola 7 group, designs, develops, integrates and maintains the identification solutions based on biometry. PRINTRAK is constituted by all of PRINTRAK International Inc. SUA company shares, and also assets, obligations and intellectual property rights associated with the biometric unit of the Motorola group. At present, PRINTRAK designs, develops, integrates and maintains the identification solutions based on biometry for the purpose of law enforcement, for civil and commercial customers around the world. PRINTRAK in mainly interested in AFIS 8 solutions (hereinafter referred to as AFIS ) for the criminal law field. 4. The notified operation is realized through the acquisition of the sole control by SAFRAN over PRINTRAK. Thus, on SAFRAN, through Sagem Sécurité, signed a Master Aquisition Agreement ( MAA ), in order to buy the biometric unit of Motorola, meaning PRINTRAK, taking the sole direct control with 100% of the shares. 5. The acquisition of the sole control directly over PRINTRAK by SAFRAN SA, through its subsidary Sagem Sécurité is an economic concentration in the meaning of Art. 10 (2) b) from the Law and in the meaning of the Regulation. 6. According to the art. 1 from the Regulation (EC) no. 139/2004 from January 20, 2004 regarding the control of economic concentration between undertakings, this economic concentration doesn t have community dimension, because it did not meet the threshold conditions in order to be notified at the European Commission. The turnover of undertakings involved in this economic concentration operation fulfilled the thresholds 9 condition stipulated in art. 14 of the Law. 2 Sagem Sécurité A.S. is a listed company incorporated in accordance with the French legislation, with its headquarters in Le Ponant de Paris, 27 Leblanc street, Paris, registered to Chambers of Commerce and Paris Societies under no ; 3 PRINTRAK International Inc. A limited liability company legally incorporated in a Delaware corporation with its principal place of business at California, 1250 North Tustin Ave, Anaheim, CA 92807, SUA.; 4 The object of transaction is the biometric business unit within Motorola Group, as presented hereinafter in chapter 3 of present Decision. Any mention in the present Decision on PRINTRAK as acquired undertaking, will be treated as the wholly biometric business owned by Motorola Group; 5 The mother-company of SAFRAN group is SAFRAN (2, boulevard du Général Martial Valin, Paris Cedex 15 France) a listed company incorporated in accordance with the French legislation and registered to Chambers of Commerce and Paris Societies under no ; 6 SAGEM ORGA SRL, Bucureşti Registered under no: J40/20346/2004 from CIF: RO , NACE: 5248 having its main activity the retail, in specialized stores, of products/services unspecified in Romanian NACE classification; 7 Motorola Inc. leads the Motorola group has its head-office in: 1303 East Algonquin Road Schaumburg, Illinois 60196, SUA; 8 Part of biometric based applications range consisting in Automated Fingerprint Identification Systems AFIS; 9 Total turnovers to be compared with thresholds, were calculated taking into account the official exchange rate published by the National Bank of Romania for the last working day from the year previous to the accomplishment of the operation, namely

3 7. The relevant markets of product/service on which the economic concentration are realized are the markets on which the acquired undertaking and the undertakings that are controlled by it carry out their activities, in Romania. In accordance to the notification, PRINTRAK does not have any branches, employees or assets in Romania, nor has it achieved turnover between 2005 and In 2007 it was active in Romania through exports based on a contract signed in 2006 between Motorola Israel Ltd 10 and [...] a company wholly owned by the Ministry of Administration and Interior. According to this contract Motorola Israel Ltd, through PRINTRAK, will update and develop AFIS identification solutions based on biometry, used at national level by the Ministry of Administration and Interior, especially systems of identification through the registration and management of digital fingerprints and criminal records. In accordance to the notification, Sagem Sécurité, established in 2007, did not achieve turnover in Romania from identification systems based on biometry and thus it did not overlap vertically or horizontally with PRINTRAK in this field on the Romanian market, although they are competitors at an international level. The relevant market is: the market of AFIS identification solutions based on biometry (including hardware and software), meant to identify persons, products related to this activity, as well as maintenance services related to these solutions. The marked could be considered broadly, but for this case, the degree of segmentation is not relevant, because the turnover is derived from a single contract. There are four general issues, with direct implications, major in the relevant market and competitive environment that influence the substitution level, namely: the interoperability with other systems, security, privacy and cost. Interoperability, especially concerning the complex systems as AFIS, has the main part in ensuring a normal competitive environment or induction of distortion and / or restrictions, part emphasized by: - the fact that in general the purchased systems are implemented on already existing systems, which means that one of the adjacent services tendered by supplier/local provider must be a database migration from one format to another, ensuring not only continuity, but also substitution at the level of demand and also an imposing of itself at the supplier level; - the more and more stressed tendency of standardized products demands, including and aligned with open and widely accepted standards and compliances, with direct effect on the degree of substitution and also on removing distortions in the pricing policies and licensing ones; - transition from a mature governmental market in a commercial one, but as well sophisticated in requirements, means and power of negotiation; - the necessity of quality and sizing upgrade of the complex systems at a national level. Sagem Sécurité indicates through notification that the main competitors are international players, that the turnover of PRINTRAK in Romania was the result an export and AFIS solutions are typically used throughout the country, which means that there is typically a unique system used for every country. A single sale in a given country can lead to a significant market share of identification solutions based on biometrics market in that country, but this doesn t necessarily lead to a long-term dominant position. These solutions are permanently updated due to the rapid development of technology or because of the need to align the new standards and regulations. All competitors in the market perceive this update cycle as an opportunity to replace the existing solution with their own. 10 Motorola Israel Ltd. as one of Motorola s Branches, located in 3 Kremenenetski str. Tel Aviv Israel 3

4 Costs related to suppliers changement are not so high to prevent a customer to buy from a new supplier and, actually, clients change suppliers very often. Any major supplier has the capability to convert data in the format used by any other supplier into its own format, which dilute the dominance imposed by the unique know-how and long-term protected patents. Also, the hardware used in such systems are not dedicated, which means that a customer does not depend on one supplier for the purchase and update of the hardware. Standards and interfaces allow AFIS systems of different vendors to communicate with each other. In any case, this economic concentration will not create access barriers. On a global market in the field of identification solutions based on biometrics as evaluated Worldwide in 2007, Sagem Sécurité has aprox. a market share [...], and PRINTRAK has a market share worldwide of [...]. On the global market are over [...] competitors and potential competitors, including some with highly dynamic evolution. Given that under the declaration of parties, Sagem Sécurité is not present in Romania on the relevant market and there is no overlap horizontally or vertically, the presence of PRINTRAK is the effect of an export and has a single contract in progress, which means that the notified concentration does not lead to economic restrictions, prevention or significant distortion of competition in the relevant market of AFIS identification systems based on biometrics. Although the involved undertakings are operating on a global market, geographic market will be limited at the national level, because the Competition Council analyzes the concentration impact only at national level, within its competencies and responsibilities levels. 8. The relevant market is currently developing, with a dynamism supported by the shift to the new agreements multi-biometrics based, standards and regulations in force and the low level of entry barriers that allow a smooth entering for new players on the market. 9. The notified economic concentration does not lead to the restriction, prevention or significant distortion of competition on the above identified relevant markets or on any part of these. Pursuant to art.21 para.2 of the Competition Law no. 21/1996, as republished, and to art. 8 para. 10 lett. b of the Regulation for the organization, operation and procedure of the Competition Council, as subsequently amended and supplemented, DECIDES Art.1 Pursuant the provisions of the Art. 46 (1) b) of the Law and the Regulation regarding the authorization of the economic concentrations, Competition Council authorizes the economic concentration realized by SAFRAN SA through its subsidiary Sagem Sécurité A.S. through the acquisition of the sole control over PRINTRAK as this was constituted by transferring all the hares of Printrak International Inc. as well as certain Assets, Liabilities and Intellectual Properties Rights within the group, related to Motorola biometric unit, observing that although the notified economic concentration operation falls within the scope of the Law, there are no serious doubts as regards the compatibility with normal competitive environment. 4

5 Art.2 Pursuant the provisions of the Art.32 par.(1) of the Law, SAGEM SÉCURITÉ A.S. shall pay the authorization fee of the notified economic concentration. Art.3 The authorization fee, in accordance to the provisions of the Guidelines on application of the provisions of art. 33 of the Competition Law no. 21/1996, with subsequent modifications and completions, regarding the calculation of the authorization fee for economic concentrations, calculated based on the turnover submitted through the address which was registered at the Competition Council under the no. RG 6590/ is amounted at (...) lei. Art.4 The amount of the authorization fee shall be paid within a term of maximum 30 days from the communication of the present Decision, to the State budget, through a treasury payment order, with the mention: for the authorization of the economic concentration. A copy of the payment order shall be sent without delay to the Competition Council. Art.5 The Competition Council s Decision can be challenged, according to the provisions of the Art. 47 (4) of the Law, within 30 days of its acknowledgement, at the Appeal Court of Bucharest, to the administrative section. Art.6 The present decision enters into force at the date of its notification. Art.7 The Service Directorate and the General Secretariat of the Competition Council shall supervise the enforcement of the present Decision. Art.8 The present Decision will be communicated by the General Secretariat of the Competition Council to Sagem Sécurité A.S., through its legal representative: [...]. President, Gheorghe Oprescu 11 The Address was re-sent to the Competition Council next day and registered under no. RG 6637/