Mergers: Commission approves proposed acquisition of Alcan by Rio Tinto
European Commission - IP/07/1434 03/10/2007
Brussels, 3rd October 2007
The European Commission has authorised under the EU Merger Regulation the acquisition of control of Alcan of Canada, by Rio Tinto of the UK. Both companies are active in the production of aluminium at worldwide level. After examination, the Commission concluded that the proposed operation would not significantly impede effective competition in the European Economic Area (EEA) or in a substantial part of it.
Rio Tinto is an international mining group active in the exploration, mining and processing of a wide range of mineral resources, such as aluminium, copper, gold, iron ore and other industrial minerals.
Alcan is involved in the aluminium sector, both in the upstream activities (mining, refining and production of aluminium) and in some downstream markets (some aluminium flat rolled products, engineered aluminium products and related research and development).
While both companies are active in the aluminium upstream activities (bauxite mining, alumina and production of primary aluminium), only Alcan is active in some downstream activities. In addition, Alcan is also active in the market for the licensing of refining and smelting technology.
The Commission’s examination of the proposed transaction showed that the horizontal overlaps between the activities of Rio Tinto and Alcan in bauxite mining, alumina refining and primary aluminium are limited and that, for all these markets, the new entity would continue to face strong competitors with significant market shares.
The Commission also assessed the vertical relationships that might be reinforced by the proposed transaction, both at the upstream level and at the downstream level, between the production of primary aluminium and the production of flat rolled products. The Commission concluded that there would be no risk of excluding competitors from access to necessary inputs in view of the existence of other vertically integrated competitors, the number of alternative suppliers and the in any case limited impact that the proposed transaction would have on these vertical relationships.
Finally, the Commission investigated the impact that the proposed transaction
might have on the markets for the licensing of technology, in particular on the
alumina refining technology and smelter cell technology, where Alcan offers
state-of the-art technologies. Firstly, the new entity would have to comply with
the commitments on licensing activities offered by Alcan in the Alcan/Pechiney
transaction, previously approved by the Commission subject to conditions (see IP/03/1309).
Secondly, the Commission found that the foreseeable market conditions (and in
particular the strong demand and supply stemming from China) should limit
significantly the ability of the new entity to prevent its competitors from
competing effectively in the supply of alumina and aluminium, even after the