Brussels, 5 March 2014
Mergers: Commission opens in-depth investigation into acquisition by Huntsman of titanium dioxide assets of Rockwood
The European Commission has opened an in-depth investigation to assess whether the planned acquisition by Huntsman of a number of equity interests held by Rockwood (both of the US) is in line with the EU Merger Regulation. The Commission has concerns that the transaction may reduce competition in the market for sulphate-based titanium dioxide in the European Economic Area (EEA). Titanium dioxide is a chemical used for whitening dishes, paper, bathtubs, clothing, toothpaste, cream, cookies, PVC window frames, etc. It also adds opacity, contributing to brightness and colour. The decision to open an in-depth inquiry does not prejudge the result of the investigation. The Commission now has 90 working days, until 22 July 2014, to take a decision.
Huntsman produces a wide range of speciality and intermediate chemicals worldwide. The businesses of Rockwood that Huntsman plans to acquire are the production of titanium dioxide and functional additives (business operating under the name "Sachtleben"); businesses in colour pigments, timber treatments, wood protection chemicals, water treatment chemicals; and a specialist provider of rubber automotive spare parts (operating under the name "Gomet").
The total size of the EEA titanium dioxide market is around EUR 3 billion. The Commission's preliminary investigation revealed that the proposed transaction would raise competition concerns in this market, and more particularly in applications using sulphate-based titanium dioxide where Huntsman and Sachtleben are the two leading suppliers worldwide and compete closely.
At this stage, the Commission has concerns that the remaining competitors may not be able to exert sufficiently strong competitive constraint on the merged entity in specialty markets using sulphate-based titanium dioxide (namely printing inks, cosmetics, pharmaceuticals, food, fibres). The removal of the competitive constraint that Huntsman and Sachtleben currently exert on each other may therefore lead to less choice for customers and potentially to higher prices for the products concerned.
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 29 January 2014.
Companies and products
Huntsman is active internationally in the chemicals sector and produces a wide range of specialty and intermediate chemicals, including titanium dioxide. Rockwood is also active worldwide in the chemicals sector, among others in the markets for titanium dioxide and functional additives under the name Sachtleben.
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 four other on-going phase II merger investigations. The first one concerns the proposed acquisition of the German cement company Cemex West by its rival Holcim of Switzerland (see IP/13/986). The deadline for a final decision in this case is 8 July 2014. In the second on-going phase II case, the Commission examines the proposed creation of a joint venture between the chemicals companies INEOS and Solvay (see IP/13/1040). The deadline for this investigation is 23 April 2014. The third on-going investigation, the planned acquisition of Telefónica Ireland by Hutchison 3G UK (H3G), concerns, similarly to the present case, the markets for retail mobile telephony and for wholesale access and call origination in Ireland (see IP/13/1048). The deadline for a final decision in this case is 19 May 2014. The last one concerns the proposed acquisition of E-Plus by Telefónica Deutschland (see IP/13/1304 and IP/14/95) with a deadline for the final decision on 14 May 2014.