Mergers: Commission clears acquisition of Columbian Chemicals by Birla Group

European Commission - Press release

Mergers: Commission clears acquisition of Columbian Chemicals by Birla Group

Brussels, 15 June 2011 - The European Commission has cleared under the EU Merger Regulation the proposed acquisition of US-based Columbian Chemicals by Indigold Carbon, which is controlled by the Indian Aditya Birla Group, both worldwide producers of carbon black. Carbon black is a chemical product used mostly in the production of tyres but also in printing inks and plastics. The Commission has concluded that although the merger would create one of the three largest companies in the sector, European customers would continue to enjoy healthy competition.

The acquisition, which would bring together two of the four largest worldwide producers of carbon black, was notified to the European Commission for clearance on 5 May this year because the companies do significant business in Europe.

The Commission examined the impact in the European Economic Area and concluded that European customers would still be able to source carbon black from different suppliers across the EEA and beyond. In particular, continued competition would remain from different producers located within the EEA and also from direct imports from Russian and Ukrainian manufacturers.

The current tight supply of carbon black within Europe is attributable to the recession and the consequent reduction in production capacity. The Commission found that this potential merger had no significant impact on production levels that were rather cyclical in nature and that production capacity is likely to respond to the recovery of demand. The Commission therefore concluded that the transaction would not significantly impede effective competition in the EEA or any substantial part of it.

The companies

Birla is a diversified industrial group with activities including the production of aluminium and copper. Its division Birla Carbon produces carbon black. As Birla Carbon has no production facilities in the EEA, it supplies customers with carbon black from its subsidiary in Alexandria, Egypt.

Columbian Chemicals is a US-based producer of carbon blacks for use in tyres, plastics, hoses, cables, seals, coatings, paints, inks etc. The group is present in different parts of the world, including in the EEA, with manufacturing facilities in Hungary, Italy, Spain and Germany.

Merger control rules and procedures

The Commission, in 1989, was given the power to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation). Its duty is to prevent concentrations that would significantly impede effective competition in the European Economic Area (EEA)1 or any substantial part of it.

The vast majority of mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).

A non-confidential version of today's decision will be available at:

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_6191