Commissioner Margrethe Vestager, in charge of competition policy, said: "Titanium dioxide pigment is an essential ingredient in many consumer products, including paper laminate used in furniture and interiors. Tronox and Cristal are two of the four major players in this market but we can approve their merger because the companies offered a suitable remedy that fully addresses our competition concerns. This decision will ensure that these products can continue to be offered at competitive prices and without reducing the number of suppliers available for consumers."
Tronox and Cristal are both active in the production of titanium dioxide pigment. They also own titanium feedstock mines, which provide the input material for pigment production, and sell zircon as a by-product of the mining. Titanium dioxide pigment, which is manufactured through either a chloride or a sulphate based production process, is used to whiten and opacify a wide range of consumer products, including paints, plastics and paper. Zircon is used in the production of tiles, ceramics and fire bricks.
The Commission's investigation
The Commission carried out an in-depth review of the proposed acquisition and found that the takeover, as initially notified, would have significantly reduced competition on the European market for chloride-based titanium dioxide pigment for use in paper laminate. Tronox and Cristal are currently two of only four major suppliers of this product, the others being Chemours and Kronos. The acquisition would therefore have led to a reduction in choice and, potentially, to price increases.
Conversely, the Commission's investigation found no competition concerns regarding:
- titanium dioxide pigment for use in other products, in particular paints and plastics. The Commission found that there are many suppliers active in Europe and that customers can and do use a wider variety of titanium dioxide pigment types, including those with a sulphate-based production process. Therefore, the takeover would not reduce choices of the European consumers purchasing these products.
- titanium feedstocks, which are the main input in titanium dioxide pigment production. Neither Tronox nor Cristal is a major supplier of titanium feedstocks to third parties. As a result, the acquisition would not significantly reduce competition on this market, or make it more difficult for other pigment producers to enter the market.
- the market for zircon, given the large number of other suppliers offering similar products.
To address the Commission's competition concerns, Tronox offered to sell its global business in titanium dioxide pigment for paper laminate comprising the required technology and other intangibles to an experienced manufacturer with chloride-based production technology active in the European Economic Area (EEA).
The acquisition of Cristal is subject to the Commission approving the buyer that Tronox will propose. In its assessment the Commission will consider the proposed buyer's suitability and incentive to compete in a way that would replicate the current competitive dynamic on the market where the Commission found competition concerns.
These commitments fully address the Commission's concerns as they ensure that the same number of suppliers will remain active on the market of chloride-based titanium dioxide pigment for paper laminate, and that customers continue to enjoy the same level of choice.
The Commission therefore considers that the proposed transaction, as modified by the commitments, would no longer raise competition concerns. The Commission's decision is conditional upon full compliance with the commitments.
The Commission has cooperated closely with other competition authorities, including the US Federal Trade Commission the Australian Competition and Consumer Commission and the Chinese Competition Authority."
Companies and products
Tronox, registered in Australia and headquartered in the US, is active in mining and in the production of minerals and chemicals, including titanium dioxide. It owns mines in Australia and South Africa, and operates production sites in Europe, the US and Australia.
Cristal (The National Titanium Dioxide Company Ltd.) is headquartered in Saudi Arabia and is part of the Tasnee industrial company. Cristal is active in mining and in the production of titanium dioxide and other titanium chemicals. It owns mines in Australia and Brazil, and operates production sites in Europe, the US, China, Brazil and Saudi Arabia.
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) or that have been referred to it (see Article 4(5) 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).
In addition to the current transaction, there are three other on-going phase II merger investigations: the proposed acquisition of Tele2 NL by T-Mobile NL, the proposed acquisition of Shazam by Apple and the proposed merger of Praxair and Linde.