Brussels, 04/05/2000 (Agence Europe) - As EUROPE mentioned briefly yesterday, following an in-depth investigation the European Commission has agreed to the merger between the American aluminium producers Alcoa and Reynolds Metals, depending on undertakings made by both parties. EUROPE recalls that Alcoa, the world's largest aluminium producer, present in North America, Brazil, Australia, China and in he EU, had launched a bid in August last to take over its compatriot Reynolds for $5.9 bn (or $71 a share). The concentration will give rise to the largest integrated producer of aluminium in the world and would have led to a dominant position in three product markets: aluminium metal, aluminia hydrate (used as raw material for thepro duction of detergents as well as the purification of water) and P0404 high pure aluminium. In the light of this, Alcoa proposed disinvestments aimed at preserving the competitive conditions prevailing on these markets before the operation and thgus guarantee healthy competition so as to protect consumer interests. In the sector of aluminium metal, Alcoa will sell disinvest Reynolds share in one of the Darling Range refineries, namely the Worsley refinery, disinvestment that will remove the competitive overlap. In addition, Allcoa has offered to sell the 50% stake held by Reynolds in Aluminium Oxide Stade GmbH, a German aluminium refinery held jointly with VAW. Regarding aluminium hydrate, the parties have offered to sell Reynold's share in Stade so as not to create a dominant position in the European Economic Area (EEA) in that sector. Finally, regarding the P0404 high purity aluminium, used in the manufacture of aerospace aluminium alloys, alcoa will sell part of a smelter.
Having consulted interested third parties in the sector and the authorities concerned in Member States, the Commission considered that the undertakings set out above were sufficient to avoid the creation of a dominant position on the markets in question and declared the operation compatible with the common market and the EEA agreement.
EUROPE recalls that, regarding this concentration the Commission had initiated an in -depth investigation (in principle four months) in December last, as at the end of the initial four-week investigation it had had "serious doubts" as to the risk of the creation of dominant positions in the different sector. The undertakings by both parties allowed for these doubts to be removed.
The "grand manoeuvres" between the aluminium producers also provided for a three-way alliance between Alcan (Canada), Algroup (Switzerland) and the EU's main producer, Pechiney (France). The Commission had considered that a merger between these three companies would have led to the creation of dominant positions incompatible with EU rules on competition, especially in the aluminium packaging sector: semi-rigid packaging recipients (for example for aerosols), aluminium leaf for cans and tins, etc.. This plan was thus replaced by an alliance between Alcan and Algroup, which, for its part, was approved.