Brussels, 21/11/2001 (Agence Europe) - Steel producers Usinor, Arbed and Aceralia have, after difficult negotiations and numerous concessions, managed to obtain the approval of European competition authorities for their merger, a challenge that is far from being won in advance. The operation as notified initially would have given the new company, that will be the leading world actor in the sector and provisionally called Newco, the power to hinder effective competition in the EU market for galvanised steel products in France, Spain and Portugal.
In July this year, the Commission had decided to open an indepth inquiry on this merger that it feared would be an obstacle to healthy and effective competition. This allowed the three partners to try and come up with something better and to put on the table concessions likely to waive uncertainty (see EUROPE of 21 July, p;12 and 19/20 November, p.13).
The parties thus proposed selling a certain number of steel production companies: Strasbourg and Beautor in France, Galmed in Spain, Dudelange in Luxembourg, Segal in Belgium, Finaverdi in Italy and Lusidoser in Portugal. The sales together represent a production capacity of over 1.7 million tonnes of galvanised products, or 6% of the market.
The steel producers also undertook to provide flat carbon steel products, the raw material of galvanised steel, to the buyers of the companies acquired. As far as the distribution markets are concerned, the partners pledged to sell Cofrafer, a steel service centre located in France, and Bamesa, a steel service centre operating in Spain and Portugal.
These sales will considerably reduce the share held by Newco on the markets in question and will strengthen the capacity of the buyers to face up to competition. The Commission considered that these concessions fully eliminate competition problems and therefore authorised the operation, which will give rise to a giant in the sector with a total crude steel production estimated at 45 million tonnes.
Announcing the decision, Commissioner Mario Monti seized the opportunity on Wednesday to answer certain recent accusations that bring into question the validity of the Commission's review procedure, mainly the fact that the latter would prevent the constitution of large European groups able to compete with American groups (EUROPE had already echoed this in its edition of 10 November, p.14). Commissioner Monti thus said: "Today's decisions (Usinor/Arbed/Aceralia and UPM-Kymmene/Haindl: see below) show that criticism voiced over the past three months concerning the recent bans on merger operations is not founded. However, companies must cooperate with the Commission (…) In the merger operations, it is therefore possible to reach a positive result with the same methods", he concluded.