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AkzoNobel ‘disappointed’ after UK Competition Commission initial verdict

By Joe Whitworth , 24-Sep-2012

AkzoNobel has said it is ‘disappointed’ after the UK Competition Commission (CC) preliminarily ruled against a merger deal over fears it could damage competition in the sector and see prices rise.

The AkzoNobel takeover of fellow metal can coating outfit Metlac Holdings was referred to the CC by the UK Office of Fair Trading (OFT) in May.

In its initial findings, the CC said the deal would result in a “substantial lessening of competition (SLC) in the supply of metal packaging coatings in the UK”. The CC will produce its final report on 6 November.  

AkzoNobel reaction

Oskar Bosson, media officer specialty chemicalsand performance coatings at AkzoNobel, told FoodProductionDaily.com the firm did not agree with the preliminary findings.

“We’re disappointed with the preliminary findings, and the key here is they are preliminary findings by the CC, and we are confident we can ultimately show them the transaction should be allowed to proceed.

“We disagree with what they are writing in their findings but we will do our best to convince them why we think they aren’t correct before November 6 and the final conclusions.”

Bosson said the firm would be contacting the CC before the deadline of 10 October to submit their position around the 'many different variables' of the takeover.

The acquisition has already been approved in Germany, Austria, Cyprus, Russia, Brazil and Pakistan.

When asked what the firm would do if the final conclusion in November ruled against the deal, Bosson added: “If that would happen, we could take the decision to appeal on the decision and we would definitely look into that option. We are confident we can provide sufficient information and reply and address the CC’s concerns so that they see it in a different light and come to different conclusions.”

AkzoNobel and Metlac are two of the four main suppliers of metal packaging coatings for segments including food and beverage cans in the European Economic Area (EAA).

A probe found between them the firms supply 40% to 55% of metal packaging coatings for beer and beverage metal packaging in the EEA and 35% to 50% of metal packaging coatings for food, caps and closures and general line metal packaging in the EEA.

Buyout clause

AkzoNobel has an existing 49% stake in Metlac Holding through its subsidiary AkzoNobel Coatings International B.V. (ANCI), as well as owning 44% of a Metlac subsidiary.

The firm exercised a pre-existing contract clause to buy the remaining stake in Metlac in January 2012 and assume sole control of the company.

Evidence considered by the CC shows that Metlac is considered by customers to be especially price-competitive and that it represents a significant competitive constraint to AkzoNobel.

The CC added it received a number of third party concerns relating to the loss of Metlac as a competitor.

Roger Witcomb, CC chairman and chairman of the AkzoNobel/Metlac inquiry, said Metlac competes strongly with AkzoNobel in the marketplace.

“A number of customers indicated that Metlac is a significant competitive force due to its low pricing, strong product quality and innovation and that its removal would eliminate a significant competitive constraint to AkzoNobel and could therefore result in price increases.”

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