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European Commission

Press release

Brussels, 15 July 2014

Mergers: Commission clears acquisition of Rautaruukki by rival SSAB, subject to conditions

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of Rautaruukki ("Ruukki") of Finland by rival SSAB of Sweden. Both companies produce and distribute carbon steel and steel construction products. The clearance is conditional on the divestment of five businesses in Finland, Sweden and Norway. The Commission had concerns that the merger, as initially notified, would have significantly reduced competition on the markets for certain carbon steel products in the Nordic countries, as well as for stainless steel and profiled steel construction sheets in Finland. The divestments address these concerns.

Commission Vice President in charge of competition policy Joaquín Almunia said: "Carbon steel flat products are used from cars to construction materials, and constitute an essential input for many European companies. Today's decision gives the Commission's green light to the creation of a European and even world leader in specialty carbon steel, while also ensuring that steel customers in the Nordic countries will not be harmed."

The Commission's investigation found that continental European steel producers, in spite of large overcapacity, have limited market presence in the Nordic countries for the supply of hot-rolled, cold-rolled and organic-coated carbon steel flat products, and face barriers to expansion in particular in terms of routes to market, access to efficient local supply chains and transport costs. Moreover, SSAB and Ruukki have strong, vertically integrated businesses that are today in close competition. The Commission was therefore concerned that the transaction as initially notified could have allowed the merged entity to raise prices in the Nordic countries absent sufficient competition by imports from continental Europe.

The Commission also found that SSAB and Ruukki are currently the clear market leaders in their respective home countries for the distribution of flat carbon steel products, and directly or indirectly control a large majority of the distribution in Norway. In addition, for the distribution of stainless steel in Finland, the combined entity would become more than three times larger than its only sizable remaining competitor BE Group.

Profiled steel construction sheets are galvanised, painted and profiled steel sheets commonly used in the Nordic countries in particular for roofing purposes. In Finland, the Commission's investigation concluded that the transaction as initially notified would have created a player three times larger than its sole remaining nationwide competitor Weckman.

The Commission was therefore concerned that the remaining players would have been unable to sufficiently constrain the merged entity to avoid price rises.

In order to remove those concerns, SSAB committed to divest:

i) a steel service centre ("SSC") in Sweden, together with a number of consignment stock and ex-mill sales contracts in Sweden;

ii) an SSC in Finland, together with a number of consignment stock and ex-mill sales contracts in Finland;

iii) SSAB's 50% share (owned through SSAB's subsidiary Tibnor) in two Norwegian-based joint ventures active as steel service centre and distributor, Norsk Stål and Norsk Stål Tynnplater;

iv) SSAB's distribution subsidiary Tibnor Oy in Finland and

v) SSAB’s construction business in Finland, Plannja Oy.

SSAB also committed to ensure that another flat carbon steel producer will own a stake in businesses (i) to (iii) after their sale. These businesses will therefore be in a position, in addition to competing with the combined entity at distribution level, to serve as a route to market for another producer to establish and develop a direct presence in the Nordic countries.

The Commission therefore concluded that the transaction, as modified by these commitments, would not raise competition concerns anymore. The decision is conditional upon full compliance with the commitments.

The transaction was notified to the Commission on 22 May 2014.

Companies and products

SSAB is a Sweden-based steel manufacturer with approximately 8 700 employees, active in the production and distribution of (mainly carbon) steel and in the supply of steel products for the construction industry.

Ruukki is a Finland-based steel manufacturer with approximately 8 700 employees, active in the production and distribution of (mainly carbon) steel and in the supply of steel products for the construction industry.

Both companies are worldwide suppliers of specialty carbon steel, such as high-strength and wear-resistant steel. In 2013, the EU steel industry produced 166 million tonnes of crude steel.

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).

More information is available on the Commission's competition website, in the public case register under the case number M.7155.

Contacts :

Antoine Colombani (+32 2 297 45 13, Twitter: @ECspokesAntoine )

Marisa Gonzalez Iglesias (+32 2 295 19 25)

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