Brussels, 30/10/2001 (Agence Europe) - no sudden or last minute developments in the Tetra Laval/Sidel dossier: the European Commission, as expected has refused the Swiss group Tetra Laval (owner of Tetra Pak packaging business) from acquiring the French group, Sidel. The European Commission judged the concessions put forward by the two parties insufficient, as well as the operation having provoked serious concerns regarding competition.
Tetra Laval is the undisputed market leader in carton packaging and accounts for more than 80% of European market share. Sidel is the main plastic packaging equipment manufacturer (PET), particularly strong in blow-moulding machines. The Commission believes that if the merger had gone ahead a monopoly in the PET packaging equipment market would have been created, as well as having strengthened Tetra's dominant position in carton packaging. PET packaging, in particular stretch blow moulding (SBM) machines are used for packaging sensitive products, namely fruit juices, liquid dairy products, fruit-flavoured drinks and ice-tea beverages. The Commission also regards carton and PET packaging as part of the same sector - liquid food packaging - although they are often considered as belonging to distinct relevant product markets. PET and carton are technical substitutes as PET can be an alternative packaging material for all products that are currently packaged in carton Some foodstuff products, such as common product segments (liquid dairy products, juices, fruit flavoured drinks and tea/coffee are already packaged in PET and carton. The combination of Tetra's dominance in carton packaging would have led to the new company dominating PET packaging. The Commission's reluctance to allow the take-over was also supported by the fact that European customers lack purchasing power. Even the most important customer does not represent more than 5% of sales and most of them are small and medium sized enterprises. Although Tetra had proposed a number of undertakings intended to get the Commission to approve the merger, as well as arguing that carton and PET packaging were two different markets (see EUROPE 26 October, pp14), the Commission gave it the thumbs down. On 27 March Tetra launched a take-over bid for Sidel SA to the tune of 1.7 billion Euro and notified the Commission on 18 May. Given the scale of the proposed merger, the Commission decided to open a preliminary inquiry and a second phase investigation on 5 July 2001 which ruled out the merger - the fifth decision of this nature this year. As in the case of Schneider/Legrand, Tetra Laval is obliged to hand back at its earliest convenience, the parts of Sidel it acquired at the time its take-over bid, namely 94% of its stake.