Antitrust Law Daily Wrap Up, ANTITRUST NEWS: EC clears PVC joint venture between INEOS and Solvay, (May 8, 2014)

The European Commission (EC) has cleared the proposed combination of the European chlorvinyls businesses of INEOS AG of Switzerland and Solvay S.A. of Belgium into a newly created joint venture, the Commission announced today. The approval is conditioned upon the divestiture of certain of INEOS' suspension polyvinyl chloride ("S-PVC") plants and related assets. This divestment will provide its purchaser with a self-standing S-PVC business capable of competing with the new joint venture. The EC had concerns that the transaction, as originally notified, would have enabled the merged entity to raise prices for S-PVC in North West Europe and for sodium hypochlorite ("bleach") in the Benelux, since it combined the two largest suppliers in these markets. .

INEOS is the parent of a group of companies which are active in the manufacture of petrochemicals, specialty chemicals and oil products. Its subsidiary, INEOS ChlorVinyls, is a European producer of chlor-alkali products and a supplier of polyvinyl chloride ("PVC").

Solvay is the parent of a group of companies which are internationally active in the research, development, production, marketing and sale of chemicals and plastics. Its subsidiary, SolVin, is a European supplier of PVC resins.

In the market for commodity S-PVC in North West Europe, the transaction would have removed INEOS' strongest competitor, Solvay. The merged entity would have faced an insufficient competitive constraint from the remaining much smaller players and would therefore have been able to raise prices. In addition, the EC found evidence that INEOS held, already before the transaction, a certain degree of market power, which enabled it to increase prices. The investigation also revealed that the parties' competitors would have had neither the capacity nor the incentives to expand production sufficiently to outweigh a price increase by the new joint venture. In addition, imports do not play an important role in this market and this is unlikely to change substantially in the next future. Finally, customers do not wield significant buyer power and would therefore have suffered from the reduction of supply options following the transaction. The EC also found that the efficiencies claimed by the parties, even if accepted, would be limited if compared to the likely price increase resulting from the transaction and would therefore not be sufficient to offset its negative effects on customers.

In the market for bleach in the Benelux, the transaction would have created a market leader with a market share above 60%, while Akzo, the only other remaining player, would clearly have been unable to sufficiently constrain the merged entity to avoid price increases for customers.

To address these concerns, the companies offered to divest INEOS' S-PVC plants in Wilhelmshaven, Mazingarbe and Beek Geleen, together with the upstream chlorine and ethylenedichloride ("EDC") production assets in Tessenderlo and Runcorn. The merged entity and the purchaser will enter into a joint venture agreement for producing chlorine at Runcorn. The divestment will provide the purchaser with a fully integrated self-standing S-PVC business. These commitments remove the overlaps between the parties' activities in both the market for commodity S-PVC in North West Europe and the market for bleach in the Benelux.

Companies: INEOS AG; Solvay S.A.

News: Antitrust