June 16, 2019
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European Union

European Union blocks merger between steelmaking giants Tata, Thyssenkrupp

Brussels, Jun 11 (efe-epa).- The European Commission has decided to block a planned merger between two steelmaking giants that would have formed a landmark joint venture, arguing that the move would have reduced competition and increased prices, the governing body said in a statement on Tuesday.

The European Union's antitrust enforcer said the planned merger of Tata Steel with ThyssenKrupp would breach its merger regulation.

“The merger between Tata Steel Europe and ThyssenKrupp is prohibited,” said the commission’s Competition Commissioner, Margrethe Vestager. “The companies couldn’t or wouldn’t solve competition problems,” she added, pointing out the “risk of higher prices and less choice for customers producing cars and cans for food.”

The commission said the parties involved in the merger had not offered adequate remedies to address these concerns.

The planned merger, announced in 2017, would have created Europe's second-largest steel producer after ArcelorMittal.

The blocked merger marked another disappointment for executives and politicians who had been endeavoring to create more European giants to resist competition from China and the United States.

“Steel is a crucial input for many things we use in our everyday life, such as canned food and cars,” Vestager said. “Millions of people in Europe work in these sectors and companies depend on competitive steel prices to sell on a global level."

She added that without remedies addressing the commission's grave competition concerns, the merger between Tata Steel and ThyssenKrupp would have resulted in prices going up.

"So we prohibited the merger to avoid serious harm to European industrial customers and consumers," she added.

The commission said that Europe’s steel sector was a key industry across the European economic area, directly employing some 360,000 workers in more than 500 production sites in 23 EU member states.

“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 galvanized flat carbon steel for the automotive industry,” the commission said in its statement.

The commission’s antitrust body had in Feb. halted plans for a merger between the train-making operations of Germany's Siemens with France's Alstom, a deal the companies had argued was essential in order to compete with Chinese rail giant CRRC Corp., the world's largest rail supplier.

The commission argued the Franco-German merger would have harmed competition in the markets for high-speed trains and signaling systems.

Brussels also said that in cases such as this it was preferable to undertake structural divestment, citing the case of when it gave the green light in 2018 for Arcelor Mittal to buy the Italian company Ilva after it had committed to sell off several of its plants in Europe.EFE

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