Brussels, 04/05/2000 (Agence Europe) - The European Commission has agreed to the acquisition of Union Carbide (UCC) by Dow Chemicals, operation that will give rise to one of the world's largest manufacturers of plastics and chemical products, as long, however, as certain assets are sold. As a reminder, in August 1999, Dow Chemical had launched a friendly $11.6 bn shares swap bid for Union Carbide, operation that would have enabled it to increase its turnover by 30% to some $24 bn (on the basis of the 1998 figures of the two companies).
At the end of its investigation, the Commission had considered that this transaction posed problems of competition in three areas: a) polyethylene resins (PE), used in the manufacture of packaging, bottles and plastic sacks, and especially linear low density polyethylene C8 (PEBDL C8); b) ethyleneamines (intermediary chemical products); c)EP technology.
In the sector of PEBDL C8, the operation would have given the two parties an accumulated market share of over 80%, five times greater that their closest rival. The two parties whence undertook that Polimeri, joint venture created between UCC and Enichem, should sell its Italian PEBDL 8 production plant, or else sell the 50% stake that UCC holds in Polimeri. Regarding ethyleneamines, the operation would have led to an accumulated world market share of 60%. Dow thus undertook to sell all is sector in the world. Finally, regarding EP technology (polyethylene), the investigation revealed problems of competition at several levels. Production technologies may be subdivided into low pressure technologies and high pressure ones. Although the latter procedures were no obstacle to a rapprochement, the low pressure ones (themselves subdivided into gas phase, slurry and solution processes) are, on the other hand subject of caution.
The Commission is of the view that there are competition problems on the market for gas-phase PE technology packages and/or on the more general market for low-pressure PE technology packages. Dow agreed to do away with this obstacle by offering to interested third parties open licences to its background metallocene patents with regard to gas phase and slurry processes, and by selling to its competitor BP Amoco all its assets in gas-phase metallocene PE technology.