Europe & UK

October 31, 2018

European Commission to conduct in-depth investigation to assess Tata Steel-ThyssenKrupp merger


Tata-Steel-ThyssenKrupp

The European Commission on October 30 issued a Press Release with regard to conducting an in-depth investigation to assess the proposed creation of a joint venture by Tata Steel and ThyssenKrupp, under the EU Merger Regulation as the Commission is concerned that at this stage the merger may reduce competition in the supply of various high-end steels.

In this regard, European Commissioner for Competition Margrethe Vestager, said: “Steel is a crucial input for many of the goods we use in our everyday life, and competitive steel prices are vital for the European economy. Industries dependent on steel employ over 30 million people in Europe and we must be able to compete in global markets. This is why we will carefully investigate the impact of the planned combination of Tata Steel's and ThyssenKrupp's steel businesses on effective competition in the steel markets.”

The release stated, Tata Steel and ThyssenKrupp are major integrated producers of flat carbon steel and electrical steel, with significant production facilities in the European Economic Area (EEA), in particular in Germany, the Netherlands, and the UK. Notably, with the transaction, Tata Steel and ThyssenKrupp would combine their European carbon steel and electrical steel businesses in a joint venture.

The Commission's preliminary competition concerns:

The Commission's initial market investigation raised several issues relating, in particular, to combining both companies' offer of certain specialty flat carbon steel and electrical steel products, namely:

• steel for automotive applications, which concerns various types of steel, predominantly galvanized, that are used to produce cars and car parts;

• metallic coated steel for packaging, which is used to produce various packaging solutions, such as food and aerosol cans; and

• grain oriented electrical steel, which is used to produce a variety of engineering products such as transformers.

The Commission stated that at this stage, it is concerned that following the transaction, customers— including various European companies, ranging from major corporations to numerous small and medium-size enterprises (SMEs)—would face a reduced choice in suppliers as well as higher prices. The Commission added that many compete with imported products in the EEA, or export their products outside Europe and compete globally.

Therefore, the Commission said that it will now conduct an in-depth investigation into the effects of this transaction to determine whether its preliminary competition concerns are confirmed.

Notably, the Commission now has 90 working days, until March 19, 2019, to take a decision.

The release concluded that the opening of an in-depth investigation does not prejudge the outcome of the investigation.

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