The European Commission has opened an in-depth investigation into chemical company BASF’s proposed takeover of Solvay’s nylon business, according to a statement issued Tuesday, June 26.
BASF said in September that it planned to close the €1.6 billion (US$1.87 billion) transaction in the third quarter of 2018.
However, the Commission said it is concerned that the deal could reduce competition in the supply of key materials in the nylon production chain.
“We need to carefully assess whether the proposed acquisition would lead to higher prices or less choice for European businesses and, ultimately, consumers,” said Margrethe Vestager, commissioner in charge of competition policy.
The proposed transaction would create an important player in the nylon compounds market with a market size almost double that of the closest competitor. The merged entity would also control substantial parts of the merchant markets and of the production capacities at all levels of the nylon production chain. Moreover, no other player would be similarly fully integrated in the production chain. Competitors will thus depend on the merged entity to continue to supply them with one or more essential inputs.
In addition, there is no indication that competition could be preserved by new entrants, since access to essential inputs (such as ADN) is limited and critical to be able to compete effectively.
Full Content: European Commission