Stiff competition

When BAA, the British Airports Authority, was deemed to have a monopoly on the UKs airports the Competition Commission stepped in, conducted a full review of the situation, and then promptly ordered it to sell off three facilities to rival companies – two of which were in the London area.

If you translate the information to our own industry, you can’t help but think that similar concerns may arise should the Rexam/Ball acquisition go ahead.

It would effectively create a behemoth metal packaging company, with operations around the world in every area of the industry. But is this a good thing or a bad thing?

In terms of innovation, a company such as this, undoubtedly with very deep pockets, would be able to combine forces and push forward with research and development projects in order to best meet the challenges today’s brands are facing in terms of packaging. This could result in new and exciting products being brought to market far sooner than could be realised should the status quo remain.

But the fact remains that should the deal be finalised the resulting company will effectively control over 60 per cent of the market in Europe, North America and Brazil.

The knock-on effect this would have for smaller companies operating in this arena is as yet unknown, but analysts are suggesting that Crown would benefit from any asset sales required to address competition concerns and would therefore increase its own market share in areas such as Europe.

Ball itself has made it clear that it will back out of the deal should competition concerns lead to the sales of assets totalling more than $1.58bn, meaning a break fee would be payable to Rexam shareholders, but all signs at the moment lean towards those involved being confident that a deal will be done.

However, one should never underestimate the competition authorities. BAA, it could be said, did just that, and look what happened there.

What are your views on the potential merger? Is it a good or a bad thing for the industry?

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