The European Commission has approved Crown Holdings acquisition of Mivisa, in Spain, as long as the company meets certain criteria regarding its competitors.
Crown, which is based in the US, and Mivisa manufacture metal food cans used for fruit and vegetables, fish and seafood, pet food and ready-made meals.
The clearance is conditional upon the divestment of Crown's plants producing metal cans in Spain and the divestment of Mivisa's metal food cans plant in the Netherlands.
To address the Commission's concerns, Crown offered to divest its metal cans plants in La Rioja, Murcia, Coruxo-Vigo, Ugao-Miravalles and Montmeló.
Crown will also install an additional production line in the Vigo plant, to let this facility serve Portuguese customers with sufficient capacity for all the sizes of cans which Crown and Mivisa currently sell in Portugal.
The divested plant in Vigo will impose a competitive constraint on the merged entity in Spain and Portugal.
The Commission agreed the plant in La Rioja can serve clients in southern France, as Mivisa does presently.
In addition, Mivisa's plant producing metal food cans in Horst (the Netherlands) will be divested. This facility currently serves Mivisa's customers in northern France.
Competition was too weak
Following the announcement that Crown wanted to acquire Mivisa, the Commission said the level of competition in markets for metal food cans in the Benelux, France, Spain and Portugal was too weak to avoid price increases. The commitments offered by Crown address these concerns.
It said the original transaction would have given the merged companies high market shares in the Benelux, France, Spain and Portugal and eliminated an important and aggressive competitor from the market, Mivisa.
In each area, only one sizeable competing supplier would have remained (Ardagh in the Benelux, France and Portugal and Auxiliar in Spain). The Commission considered this remaining supplier would have had limited incentives to compete with the merged entity.
In view of the remedies proposed, the Commission agreed the transaction, as modified, would raise no competition concerns. This decision is conditional upon full compliance with the commitments.
Other players would also have had limited ability to supply customers with large volumes and product ranges. Given this lack of alternatives, customers would have likely faced price increases.
Tinplate food cans
The Commission did not identify competition concerns with respect to the production and supply of food metal cans in Germany and in Hungary, because of the presence of significant alternative suppliers in addition to Ardagh (such as: Silgan, CanPack and PikoPack in Hungary and its adjacent areas and Silgan, G&M and CanPack in Germany and its adjacent areas).
Mivisa is headquartered in Spain and has production facilities in Hungary, the Netherlands, Morocco and Peru. It is primarily active in the manufacturing of tinplate food cans, metal closures and stand-alone can ends.
The approval of the Commission is subject to Crown entering into final binding agreements, with purchasers to be approved by the Commission, for the sale of Crown's Spanish food can business and Mivisa's facility in Horst, Netherlands.
The impact of the divestitures would have been to reduce net sales by approximately €113m in 2013.
FoodProductionDaily.com has contacted Crown Holdings for further comment.
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