Antitrust Law Daily Wrap Up, ANTITRUST NEWS: EC clears Kingspan’s acquisition of Joris Ide Group, Allergan’s acquisition of Actavis, (Mar 17, 2015)

By Linda O’Brien, J.D., LL.M.

The European Commission (EC) has cleared under the European Union (EU) merger regulation the proposed acquisition of Joris Ide Group of Belgium by competitor Kingspan Group Plc of Ireland, as well as the proposed acquisition of Allergan of the United States by Actavis of Ireland, the EC announced on March 16.

Kingspan-Joris Ide Group deal. Both Kingspan and Joris Ide Group manufacture sandwich panels and construction sheets in several production sites in the European Economic Area (EEA). The Commission concluded that the transaction would raise no competition concerns, in particular because the merged entity will continue to face sufficiently strong competition after the merger and customers will still have sufficient alternative suppliers in all markets concerned.

Sandwich panels are used in the construction industry as cladding or roofing and are made of an insulation core (polyurethane or mineral wool) covered by two steel facings. Construction sheets are also used in the construction industry for cladding, roofing and decking, and are made from cold rolled galvanized or color-coated flat carbon steel.

The EC examined the effects of the merger on competition in the areas of sandwich panels with a focus on three geographic areas with significant overlaps, namely (1) the Benelux countries and surrounding area, (2) the United Kingdom and Ireland, and (3) Hungary and surrounding area. The Commission also looked at the competitive landscape for mineral wool panels, which are a type of sandwich panels, at EEA level and for construction sheets in Austria and Hungary.

The Commission's investigation showed that, even after the merger, there will be several players with spare capacity, including the two integrated suppliers ArcelorMittal and Tata Steel, supplying sandwich panels in North-Western Europe. Moreover, it is easy for competitors to expand in other geographic areas as the cost of investments for setting up a new production line is relatively limited.

In the United Kingdom and Ireland, Kingspan already holds a large part of the market, especially for foam sandwich panels. However, the EC found that the operation would not lead to competition concerns as Joris Ide has no production facilities in the area and the parties are not close competitors there. Furthermore, customers will still have sufficient alternative suppliers, such as Tata Steel, and there are other potential entrants.

In the region surrounding Hungary, the merged entity's combined market share will remain moderate for the supply of sandwich panels, competitors are not capacity constrained, and customers will have sufficient alternative suppliers in the area. The Commission's investigation also found that several competitors—such as Trimo, Ruuki, and Eurobond—will continue to supply mineral wood panels in the EEA after the transaction.

Finally, the Commission concluded that the transaction was unlikely to lead to less competition or higher prices in relation to the production of construction sheets in Hungary and in Austria since customers will have sufficient alternative suppliers.

Allergan-Actavis merger. The EC also announced on March 16 that it has approved under the EU merger regulation the acquisition of Allergan of the US by Actavis of Ireland. Allergan is a healthcare company with a portfolio of pharmaceuticals, biologics, medical devices, and over-the-counter products. Actavis develops pharmaceutical products. The companies' activities overlap in particular in two areas of ophthalmology: anti-glaucoma treatments and artificial tears and ocular lubricants for the treatment of dry eyes. The Commission concluded that the proposed acquisition would not raise competition concerns, because the combined market shares of the companies will remain moderate and a number of strong players will remain in the market after the merger.

Companies: Joris Ide Group; Kingspan Group Plc; Allergan Inc.; Actavis Plc

News: AcquisitionsMergers Antitrust