Packaging coatings merger referred to Competition Commission

The Office of Fair Trading has referred AkzoNobel’s proposed takeover of Italian based packaging coatings producer Metlac to the Competition Commission. This follows OFT concerns that the merger may remove a competitive supplier from the market.

AkzoNobel and Metlac both manufacture and supply metal packaging coatings. These are used in the production of beverage and food cans. Between them, the parties supply around 40 to 50% of the European Economic Area (EEA) market. The OFT received a number of third party concerns relating to the loss of Metlac as a competitor in the supply of metal packaging coatings.

The OFT’s investigation found that the merging parties are two of four main suppliers of metal packaging coatings in the EEA. Evidence considered by the OFT shows that Metlac represents a significant competitive constraint to AkzoNobel and is considered to be especially price competitive in the supply of metal packaging coatings by customers.

Ali Nikpay, OFT senior director and decision maker in this case, said: ‘Metlac stands out as a particularly close competitor to AkzoNobel, the leading player, in this market.

“A number of customers indicated that the removal of Metlac would eliminate a significant competitive constraint to AkzoNobel and would therefore result in price increases. The transaction will benefit from a more in-depth and detailed investigation by the Competition Commission to assess the competitive effects of taking Metlac out of the marketplace.”

The Competition Commission is expected to report by 6 November 2012.

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