Both NKT and ABB's high voltage cable businesses develop and supply power cables and cable accessories. In its investigation, the Commission looked at the effects on competition of the removal of one competitor, and whether the transaction would make it more likely that the remaining players could co-ordinate their competitive behaviour.
This assessment was important given the history of collusion in the industry. In 2014 the Commission found that the main producers of high voltage power cables, including NKT and ABB, were involved in a cartel aimed at restricting competition for high voltage underground and submarine power cable projects. The producers had agreed on market and customer allocation. The cartel included Japanese and Korean producers refraining from competing for projects in the EEA, thus staying out of the European companies' home territory.
The Commission's investigation focussed on the parties' overlapping activities for high voltage power cables, in particular, on AC submarine power cables and DC submarine power cables. These cables are used to connect transmission grids separated by water and to bring onshore the energy generated by wind farms at sea. NKT is a potential entrant in the market for DC submarine power cables.
Based on the results of its extensive market investigation, the Commission found that the proposed acquisition would not result in a significant reduction in competition and that a number of strong competitors will remain post-transaction. Significantly, the Commission's investigation revealed the recent and successful entry of competitors from Asia, such as LS Cables and Sumitomo. These companies are now helping to drive and ensure competition in the high voltage cable and power cable accessories markets.
Companies and products
ABB's high voltage cable and cable accessories businesses are two wholly owned businesses of the ABB Group and constitute parts of ABB's Power Grids division. The businesses have a geographic focus on Europe and are active in the development, manufacturing, and sales of: (i) high voltage and extra high voltage power cable systems; and (ii) power cable accessories designed for use with power cables.
NKT, through its cables business unit, manufactures and supplies cable solutions. Its power cables operations are carried out mainly in Europe.
Merger control rules and procedures
The transaction was notified to the Commission on 23 January 2017.
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).