McCormick Tractor Distribution Agreement

McCormick Tractors International Ltd, the new farm equipment business based at Doncaster, South Yorkshire, has been given a head-start in its quest to become an established player in the global farm machinery industry.

It has a well-known product range, open access to a top-class dealer network, and a degree of competitor protection in its home and other European markets. Moreover, thanks to the wide-ranging agreement negotiated between McCormick's parent company, Landini SpA, and CNH Global NV, it will quickly be able to expand its product offering with higher horsepower tractors.

The agreement arises from European Commission concerns that a merged Case-New Holland business would hold an excessive share of key tractor markets within Europe which might deny fair competitive practice. Before approving the merger, therefore, the Commission required CNH Global NV to sell the Doncaster tractor plant as a going concern, as well as all rights to the CX and MX-C models made there. It also required important undertakings with regard to distribution and competition.

Under the terms of the agreement between Landini SpA and CNH Global NV, Landini acquires:

• The tractor plant located in Doncaster, including the training centre and all design, engineering and manufacturing staff, plus key members of other important departments.
• All technical and commercial rights to the CX and MX-C model tractors.
• The 'McCormick' brand name.
• A contract for McCormick to build CX and MX-C tractors in Case-IH livery for sale outside Europe.
• A contract for McCormick to produce MX Maxxum 100hp to 166hp tractors for sale by CNH Global NV through Case-IH dealers.
• An agreement enabling McCormick to produce its own re-engined and re-styled version of the MX Maxxum tractor.

"These are all important elements of a comprehensive agreement that lays sound foundations for McCormick Tractors International and its future development," says Mike Edmond, sales & marketing director. "It ensures that production volumes will remain at economic levels during the early stages of the business, and provides for future development of the McCormick range into other important market sectors."

The production elements of the agreement are backed by conditions governing distribution and parts support:

• Case-IH dealers within the European Economic Area (EEA) plus Switzerland, and New Holland dealers in Denmark, are free (if appointed by McCormick) to sell the McCormick CX and MC tractors for as long as they wish.
• CNH Global will provide parts support for McCormick CX and MC tractors sold through Case-IH dealers.
• In Austria, Belgium, Luxembourg, Denmark, the United Kingdom and Iceland, CNH Global is obliged for two years not to supply Case-IH dealers with tractors that directly compete with the McCormick CX and MC tractors.

Mike Edmond comments: "CNH Global's co-operation with parts and service support for Case-IH dealers selling McCormick products will reassure potential dealers and customers that they will have good back-up from the start. This is obviously very important for a new business such as ours."