The European Commission decided on Wednesday 15 January to clear Synthomer’s proposed acquisition of Omnova, both manufacturers of so-called ‘specialty’ chemicals. The authorisation is subject to the divestment of a remedy package.
Margrethe Vestager, Executive Vice President in charge of competition policy, stated that although these groups are the only two manufacturers of this type of latex in Europe, “we can approve their merger because the companies offered to divest all of Synthomer’s VP Latex production, thus preserving for customers the competitive situation in the market”.
Omnova (United States) and Synthomer (United Kingdom) are manufacturers of specialty chemicals, including vinyl pyridine latex (‘VP latex’). This chemical is used by tyre manufacturers to make safer products for the automotive industry.
The Commission had concerns that the transaction would reduce competition in the market for the supply of VP Latex. The investigation confirmed that this market is highly concentrated in the European Economic Area (EEA), with Synthomer and Omnova being the only two operators with production capacity in the EEA. Moreover, the market is characterised by high barriers to trade across regions. The acquisition could therefore have resulted in higher prices, reduced choice of products and a decline in the quality of services provided to customers.
Corrective action. To allay the Commission’s fears, Synthomer has proposed to divest its global ‘VP Latex’ business. This divestment includes the full transfer of the necessary technology, brands and production equipment to a manufacturer specialising in the relevant chemical field. These commitments remove the Commission’s concerns as they eliminate the overlap between Synthomer and Omnova’s activities in VP Latex. They also ensure that the number of suppliers in the VP Latex market will remain unchanged and that customers will continue to enjoy the same level of choice. (Original version in French by Lionel Changeur)