Related to this story
Topics Mergers & Acquisitions Government & Legislation Materials Suppliers
Companies & Associations Solvay SA
The European Commission (EC) has opened what it called an "in-depth investigation" into the proposed merger of Ineos' and Solvay's European chlorvinyls operations.
In May the two companies announced plans to create a 50:50 joint venture which the pair said would become one of the top three producers of chlorvinyls in the world.
The Commission said a preliminary investigation had "expressed competition concerns" in the market of suspension PVC used in pipe manufacturing, molded fittings, window and door frames, and bleach, where both Ineos and Solvay were key players.
The decision to open an in-depth inquiry did not prejudge the result of the investigation, said the Commission, which now has 90 working days — until March 21 — to arrive at a final decision on whether the joint venture would reduce effective competition in the European Economic Area (EEA).
The PVC market in the EEA is worth around 3.2 billion euros, the Commission said.
Joaquín Almunia, Commission vice president in charge of competition policy, said: "The proposed merger would remove a key competitor in the markets for PVC and bleach.
"The Commission needs to make sure that competition is preserved for both products and ultimately prevent harm to European consumers."
In a statement, the Commission said it had 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 potentially to an increase in prices for the products concerned."
Commitments offered by both companies to address these concerns "failed to provide a sufficiently clear-cut solution to eliminate the Commission's concerns."
The Commission said it would investigate in-depth the effects of the proposed deal "to determine whether its initial concerns are confirmed or not."