Margrethe Vestager – Photo © European Union 2019
(BRUSSELS) – The EU Commission decided Tuesday to prohibit the proposed joint venture between two major steelmakers Tata Steel and ThyssenKrupp, saying it would have reduced competition and increased prices.
The EU blocked the merger under the EU Merger Regulation to avoid ‘serious harm to European industrial customers and consumers’, according to the Competition Commissioner Margrethe Vestager.
“Steel is a crucial input for many things we use in our everyday life, such as canned food and cars,” she said. “Millions of people in Europe work in these sectors and companies depend on competitive steel prices to sell on a global level. Without remedies addressing our serious competition concerns, the merger between Tata Steel and ThyssenKrupp would have resulted in higher prices.”
The Commission’s decision follows an in-depth investigation of the proposed joint venture, which would have combined the flat carbon steel and electrical steel activities of ThyssenKrupp and Tata Steel in the European Economic Area (EEA).
ThyssenKrupp is the second largest producer of flat carbon steel in the EEA while Tata Steel is the third largest. Both companies are significant producers of metallic coated and laminated steel for packaging applications and of galvanised flat carbon steel for the automotive industry.
The European steel sector is a key industry across the EEA it employs about 360,000 people in more than 500 production sites in 23 EU Member States.
The EU executive says its decision ‘preserves effective competition on European steel markets and the competitiveness of this industry’. It will also ensure that key customer industries such as the European automotive industry and the packaging industry continue to enjoy access to key inputs at competitive conditions.
It adds that as a result, consumers in Europe can continue to rely on the affordability of canned food products and the European automotive industry is able to source steel competitively from the EEA and that product innovation in steel is preserved in support of the transition to more climate friendly and environmentally sustainable mobility.
During the investigation, the Commission received feedback from a large number of customers active in the packaging and automotive industries. These companies depend on competitive steel prices to offer their products to customers at competitive prices and many were worried that the transaction would result in higher prices.
The merging companies offered remedies, but these did not adequately address competition concerns, says the EU executive..
In metallic coated and laminated steel products for packaging, it said the proposed divestment would only have covered a small part of the overlap between the merging companies.
In automotive hot dip galvanised steel products, it said the proposed divestment did not include adequate finishing assets capable of serving the customers in the geographic areas the merging companies mostly compete in.
More information will be available on the Commission’s competition website, in the public case register under the case number M.8713.
