Antitrust Law Daily Wrap Up, ANTITRUST NEWS: European Commission to investigate joint venture in polyvinyl chloride business, (Nov 6, 2013)

The European Commission (EC) has opened an in-depth investigation to assess whether the proposed joint venture between the European chlorvinyls businesses of INEOS of Switzerland and Solvay of Belgium is in line with the EU Merger Regulation, according to a recent announcement. The EC’s preliminary investigation showed competition concerns in the market of suspension polyvinyl chloride (S-PVC) and sodium hypochlorite (bleach) where INEOS and Solvay are key players.

S-PVC is a type of resin widely used for the manufacture of pipes, molded fittings, and window and door frames. The total size of the S-PVC market in the EEA is approximately € 3.2 billion. Bleach is used primarily for water treatment, disinfection, and laundry bleaching.

Joaquin Almunia, the Commission Vice President responsible for Competition Policy, said “The proposed merger would remove a key competitor in the markets of PVC and bleach. The Commission needs to make sure that competition is preserved for both products and ultimately prevent harm to European consumers.”

The EC’s initial investigation has shown that the proposed transaction would combine the two leading suppliers of S-PVC in the European Economic Area (EEA) and northwest Europe and of bleach in the Benelux countries. The Commission has concerns that the remaining competitors in both markets may not be able to exert sufficiently strong constraints on the behavior of the joint venture in the market. The removal of the competitive constraint that INEOS and Solvay currently exert on each other may lead to a reduction of choice for customers and an increase in prices for the products involved.

INEOS and Solvay offered commitments to address the Commission’s concerns. However, the Commission concluded that those commitments failed to provide a sufficiently clear-cut solution to eliminate their concerns. It will now investigate the effects of the proposed transaction to determine whether or not its initial concerns are confirmed. The Commission was notified of the transaction on September 16, 2013.

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-alkai products and 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. The joint venture will be controlled by both parent companies. According to the agreement between INEOS and Solvay, no later than six years after its creation, the joint venture will transfer under the sole control of INEOS.

The EC stated that the decision to open an in-depth investigation does not prejudge the result of the investigation. It has until March 21, 2014, to make a final decision on whether the transaction would reduce effective competition in the EEA.

Companies: INEOS Group Ltd.; Solvay SA

News: Antitrust