Antitrust Law Daily Wrap Up, TOP STORY: EC will pop top on Ball/Rexam beverage can tie-up, (Jul 20, 2015)
Organizations Mentioned:Ball Corp | Ball Corp. | Rexam plc
By Jeffrey May, J.D.
Ball Corporation’s proposed acquisition of Rexam plc is going to get an in-depth review from the European Commission (EC). Rexam and Ball are, respectively, the first and second largest beverage can manufacturers in Europe. The EC announced today that its preliminary competition concerns relate to the supply of beverage cans and aluminum bottles throughout the European Economic Area (EEA).
“After the proposed takeover, their combined market shares would be very high at both EEA and regional level and only two other players would remain on the market,” according to the EC announcement. “The Parties are also the two suppliers with the most extensive network of plants across the EEA. After the transaction, the Parties would own approximately two thirds of the plants located in Europe.”
The EC also expressed concerns with high entry barriers in the industry. The scale needed to ensure sufficiently large customer orders and the significant investment required to build a plant make entry and expansion difficult in a relatively short period of time, it was noted. “The combination of the two largest players is therefore likely to result in price increases for customers and ultimately for consumers,” the EC said.
U.S.-based Ball said that the Phase II review is “a standard step when the European Commission is conducting an in-depth review under the EU Merger Regulation.” The company expects that all necessary regulatory clearances will be obtained during the first half of 2016.
Other reviews. The transaction, which was announced in February and has been valued at approximately $8.4 billion including the assumption of debt, is also being looked at by the FTC and Brazil’s competition authority, CADE. On April 7, Ball disclosed that it had received a second request for information from the FTC with respect to that agency’s investigation of the deal.
Companies: Ball Corp.; Rexam plc
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