Brussels, 26 March 2013
Mergers: Commission opens in-depth investigation into proposed acquisition of Shell's Harburg refinery assets by Nynas
The European Commission has opened an in-depth investigation under the EU Merger Regulation into the planned acquisition by Nynas AB of Sweden of refinery assets located in Hamburg/Harburg (Germany) and currently owned by Shell Deutschland Oil GmbH. The Commission’s initial investigation revealed possible competition concerns in the markets for naphthenic base oils, naphthenic process oils and transformer oils ('TFO') where the merged entity would have very high market shares in the European Economic Area (EEA). These oils are used for the production of industrial greases, metalworking fluids, adhesives, inks, insoluble sulphur, industrial rubber, fertilisers, defoamers and additives. The decision to open an in-depth inquiry does not prejudge the result of the investigation. The Commission now has 90 working days, until 8 August 2013, to take a final decision on whether the merger would significantly impede effective competition in the EEA.
Commission Vice President in charge of competition policy Joaquín Almunia said: "The proposed merger would remove the only competing producer of naphthenic base oils in the EEA. The Commission needs to make sure that it would not raise production costs for European companies as well as prices for the customers of the various end products."
The transaction would leave the merged entity as the only producer of naphthenic base oils in the EEA. Base oils are derived from crude oil and can be further tested into process oils used in chemical processes or blended into transformer oils used as insulating material for transformers. The Commission's initial investigation has shown that following the transaction no other competitor would remain to supply naphthenic oils for use in some end applications like for instance industrial rubber, fertilizers and defoamers. With respect to other segments, including greases, metalworking fluids or cold-set inks, and transformer oils the few remaining competitors who importing into the EEA may not exercise a sufficient competitive constraint.
The case was notified to the Commission on 19 February 2013.
Background on Companies and Products
Nynas produces and sells naphthenic base oils for industrial lubricants, process oils (used in chemical processes to extend the final product, e.g. additives, adhesives, fertilisers) and TFO (insulating material for transformers). Nynas is jointly controlled by Petróleos de Venezuela S.A (Venezuela) and Neste Oil Oyj (Finland).
Shell Deutschland Oil GmbH is part of the Shell group of companies ("Shell"), whose parent company is Royal Dutch Shell Plc. Shell is a fully integrated global group of energy and petrochemical companies involved in upstream and downstream activities, from exploration to refining to distribution and retail sales.
The 'Harburg refinery assets' are the Harburg base oil manufacturing plant to produce base oil from distillates and certain parts of the refinery which are necessary to produce distillates from crude oil. The remainder of the refinery will be retained by Shell.
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 vast majority of notified 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).
There are currently two other on-going phase II investigations. In the first on-going phase II, the Commission investigates the proposed combination of Munksjö and the European label and processing business of Ahlstrom, in the paper industry (see IP/12/1338), with a deadline on 7 June 2013. The second case involves the acquisition by Syniverse of Mach, both active in the provision of data clearing and roaming settlement services for mobile operators, with a deadline on 30 May 2013 (see IP/12/1439).