On Wednesday 5 April, the European Commission prohibited the proposed takeover of Cemex Croatia by HeidelbergCement and Schwenk through their joint venture company Duna Dráva Cement (DDC).
The Commission had strong concerns that the takeover would have significantly reduced competition in grey cement markets and increased prices in Croatia. The parties “failed to offer appropriate remedies to address these concerns”, said Competition Commissioner Margrethe Vestager.
Cemex Croatia is currently the country’s largest cement producer, and DDC and HeidelbergCement are the largest cement importers in Croatia.
The takeover would have eliminated competition between companies that were competing head-to-head for the business of Croatian cement customers and could have led to a dominant position in the markets. The combined market shares of the parties would have been around 45-50% in the markets and reached more than 70% in parts of the country.
The Commission’s investigation also found that DDC had been pursuing a strategy to increase sales in Croatia, resulting in more competitive prices for Croatian customers in recent years. The takeover would have eliminated this competition.
Furthermore, the Commission found specific evidence forecasting appreciable cement price increases after the deal.
“For mergers between direct competitors, we generally have a preference for a clean, structural solution, such as selling a production plant”, said Vestager. The parties decided not to offer that sort of commitment. “Instead they proposed to give a competitor access to a cement terminal in southern Croatia”, she said, adding that assessment of this proposal with competitors and other stakeholders persuaded her that this solution was not sufficient to address her concerns.
Conditional approval of pesticides’ sector concentration. Also on Wednesday, the Commission approved a proposed acquisition in the pesticides sector but attached a number of conditions.
The companies concerned are Syngenta, the world’s largest pesticides supplier, and ChemChina, a group which operates on European pesticides markets through Adama, its Israel-based subsidiary. Adama is the world’s largest producer of generic pesticides.
The Commission had concerns that the transaction as notified would have reduced competition in a number of existing markets for pesticides. There were also concerns that the transaction would reduce competition for plant growth regulators.
The parties offered to sell off a major share of their overlapping business, including some pesticides owned by Syngenta and a significant part of Adama’s existing business.
The Commission said it was satisfied with these commitments. (Original version in French by Élodie Lamer)