The Bundeskartellamt, Germany's competition authority, has granted approval for KNDS N.V., based in Amsterdam, to increase its stake in RENK Group AG, located in Augsburg, to 25% plus one vote. This acquisition is significant as RENK specializes in manufacturing gearboxes and suspension systems for military vehicles, which are utilized by the German Bundeswehr and other NATO forces, including the U.S. military.

RENK holds a strong market position in Germany, particularly in the production of gearboxes for tracked military vehicles, such as tanks. These gearboxes not only transmit power from the engine to the chassis but also provide braking and steering functions, distinguishing them from other military vehicle components.

KNDS, a Franco-German defense conglomerate formed from the merger of Krauss-Maffei Wegmann and French defense firm Nexter, is partially owned by the French government. The Bundeskartellamt's president, Andreas Mundt, stated that KNDS and RENK operate at different market levels, and the investigation focused on whether the acquisition would disadvantage other system providers that also source components from RENK.

The findings indicated that it would not be economically viable for RENK to limit supply to other customers, as KNDS will not have controlling influence over RENK due to its minority stake. Additionally, KNDS sources gearboxes from RENK for military vehicles like the Leopard 2 tank, and other system providers are similarly reliant on RENK's products.

The investigation involved discussions with various market participants, confirming that there is no risk of preferential treatment for KNDS in supply situations. RENK's production capacity significantly exceeds KNDS's needs, and the collaborative nature of military contracts makes isolation from other suppliers unlikely.

Moreover, government demand plays a crucial role in the market dynamics, as military vehicle systems undergo extensive development phases where governments influence component selection and supplier choices through various requirements.

In the after-sales market, RENK faces competition from other providers offering similar services for gearboxes and suspension systems, further mitigating concerns about market dominance.