Brussels, 30/01/2002 (Agence Europe) - On Wednesday, the Commission adopted two decisions fixing the arrangements for the demerger between the French companies Schneider and Legrand, on one hand, and between the Swiss company Tetra Laval and French Sidel, on the other.
- Schneider/Legrand: On 10 October, the Commission banned the acquisition of Legrand by Schneider, considering that the merger would have considerably weakened competition on new electrical equipment markets (see EUROPE of 11 October, p.10). Through a public exchange offer, Schneider had already acquired around 98% of Legrand shares. The Commission was therefore compelled to order Schneider to divest its interests in Legrand in order to restore effective competition conditions while respecting the interests of both companies in the best possible way. It decided that Schneider will not be able to keep a stake in Legrand that is higher than 5% as a higher stake would reduce the incentive for Scheider to compete actively with Legrand. On the other hand, Schneider may choose the form and the legal arrangements for demerger, which means, in practice, that Schneider may choose between selling its stake to a third party or refloating all the Legrand shares on the stock market. In the first case, Scheider must gain the Commission's approval for the buyer of Legrand to ensure independence of Schneider and its viability. The deadline given to the French group for achieving this demerger remains confidential but specialists speak of nine months with the possibility of renewal.
- Tetra Laval/Sidel: Notified on 18 May 2001, the acquisition of Sidel by Tetra Laval had also been banned on 30 October last by the Commission as it would reportedly have significantly hampered competition in the EEA on various markets for liquid food packaging equipment (see EUROPE of 31 October, p.10). As in the previous case, Tetra Laval immediately launched the European clearance, acquiring a takeover on Sidel shares with which it harvested 94% of the capital. The Commission was therefore compelled to order that Tetra Laval divest itself of all these shares in order to reestablish competition in the sector. All the direct structural and financial links should be abolished between the two companies. As in the Schneider/Legrand case, the Commission lets Tetra Laval choose the method it thinks fit for divestiture. The Commission, however, will have to review and approve the final divestiture structure as well as the identity of the buyer or buyers to ensure the restoration of conditions of effective competition on the markets. The time limit for this is confidential but is believed to be twelve months.
The Commission stressed that its prohibition on a merger operation remains an exception (18 in 11 years) and that the prohibited operations already carried out are still rarer (four times, including the two above-mentioned operations).