IP/10/1630
Brussels, 30 November 2010
Mergers: Commission approves acquisition of chemical company Cognis by BASF, subject to conditions
The European Commission has cleared under the EU Merger Regulation the proposed acquisition of Cognis by BASF, both chemical companies of Germany. The decision is conditional upon the divestment of activities in the sector of hydroxy monomers, a chemical product used in coatings and adhesives. The proposed transaction, as initially notified, would have created a very strong player in a market where concentration is already high. To remedy the Commission's concerns, BASF offered to divest activities in the sector in question. In the light of these commitments, the Commission concluded that the proposed transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.
BASF is the world’s largest chemical company. It is mainly active in the supply of chemicals, crude oil and natural gas, including specialty chemicals, plastics, performance products, functional solutions and agricultural solutions. Cognis is a supplier of specialty chemicals, nutritional ingredients and functional products.
The Commission's investigation revealed that the proposed transaction would not significantly modify the structure of the majority of the relevant markets, as a number of credible and significant competitors would continue to exercise a competitive constraint on the merged entity.
However, the Commission found that the proposed transaction, as initially notified, would have raised competition concerns in the market for hydroxy monomers, where the merged entity would have had a strong position in a market where the concentration level is already high. Hydroxy monomers are a a chemical product used in coatings and adhesives.
To resolve these competition concerns, BASF proposed to divest Cognis’ entire hydroxy monomers production business thus eliminating any overlap. BASF will also divest the multifunctional methacrylates and adducts businesses operating on the Hythe site. In addition BASF will grant intellectual property rights that will allow the buyer to produce Polyalkylene Glycols (PAG) and PAG based lubricants, which are mainly used in industrial formulations and household products, exclusively for BASF for a transition period and then in its own right.
The Commission's investigation showed that the divested businesses would be viable and that the commitments would resolve all identified competition concerns.
The transaction was notified to the Commission on 8 October 2010. Further information on the case is available at:
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_5927
