Brussels, 05 November 2013
Mergers: Commission opens in-depth investigation into joint venture between INEOS and Solvay in PVC business
The European Commission has opened an in-depth investigation to assess whether the planned combination of the European chlorvinyls businesses of INEOS of Switzerland and Solvay of Belgium into a newly created joint venture was in line with the EU Merger Regulation. INEOS is active in the manufacture of petrochemicals, specialty chemicals and oil products. Solvay is active in the research, development, production, marketing and sale of chemicals and plastics. The Commission's preliminary investigation indicated competition concerns in the market of suspension polyvinyl chloride ("S-PVC") and sodium hypochlorite ("bleach"), where each of Solvay and Ineos is a key player. The decision to open an in-depth inquiry does not prejudge the result of the investigation. The Commission now has 90 working days, until 21 March 2014, to take a final decision on whether the transaction would reduce effective competition in the European Economic Area (EEA).
Commission Vice President in charge of competition policy Joaquín Almunia said: “The proposed merger would remove a key competitor in the markets for PVC and bleach. The Commission needs to make sure that competition is preserved for both products and ultimately prevent harm to European consumers."
S-PVC is a type of resin widely used for the manufacture of pipes, moulded fittings, window and door frames. The total size of the S-PVC market in the EEA is around € 3.2 billion. Bleach is mainly used for water treatment, disinfection and laundry bleaching.
The Commission’s initial investigation has shown that the proposed transaction would combine the two leading suppliers of S-PVC in the EEA and in North-West Europe and of bleach in the Benelux. At this stage of the investigation, the Commission has concerns that the remaining competitors in both markets may not be able to exert sufficiently strong constraints on the behaviour of the joint venture in the market. The removal of the competitive constraint that INEOS and Solvay currently exert on each other may lead to a reduction of choice for customers and potentially to an increase in prices for the products concerned.
The parties offered commitments in order to remove the Commission's competition concerns. However, the Commission considered that the commitments failed to provide a sufficiently clear-cut solution to eliminate the Commission's concerns. The Commission will now investigate the effects of this transaction in-depth to determine whether its initial concerns are confirmed or not.
The transaction was notified to the Commission on 16 September 2013.
Companies and products
INEOS is the parent of a group of companies which are active in the manufacture of petrochemicals, specialty chemicals and oil products. Its subsidiary, INEOS ChlorVinyls, is a European producer of chlor-alkali products and a supplier of polyvinyl chloride ("PVC").
Solvay is the parent of a group of companies which are internationally active in the research, development, production, marketing and sale of chemicals and plastics. Its subsidiary, SolVin, is a European supplier of PVC resins.
The JV will be jointly controlled by its two parents. According to the agreement between INEOS and Solvay, no later than six years after its creation, the JV will pass under the sole control of INEOS.
Merger control rules and procedures
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The Commission clears the vast majority of mergers after a one-month review, but if it has competition concerns it must open an in-depth investigation (Phase II review). The opening of a full probe does not prejudge its outcome.
There is currently one other on-going phase II investigation, into the planned acquisition of the German company Cemex West by its Swiss rival Holcim (see IP/13/986). The deadline for the Commission's decision in this case is 10 March 2014.