Mexico City — Mexico's antitrust authority has conditioned its approval of a merger between a medical equipment supplier and a major PVC pipe maker on the removal of a "noncompetition clause" from the deal.
Medical equipment supplier Profluent Plastic Technologies, part of independent private equity firm Australis Partners, has been eyeing PVC pipe maker Plastics Technology de Mexico S de RL de CV of San José Iturbide in Mexico's Guanajuato state. Plastics Technology de Mexico is a joint venture of pipe maker JM Eagle.
But on June 29, antitrust authority COFECE (Comisión Federal de Competencia Económica) said the agreement between the two parties included a "noncompetition clause with terms that could hinder the process of competition and free market access not related to the notified concentration."
"Since the companies participate in different markets," it said, "their activities in the Mexican territory do not overlap. Nonetheless, for this transaction the companies established a noncompetition clause with terms that, in the opinion of this commission, are excessive, with implications for markets unrelated with the notified operation and, thus, unjustified. This could potentially cause risks to the process of competition and free market access."
COFECE said it recommended modification of the "overreaching terms of the noncompetition clause" to make them acceptable to the commission.
"Economic agents must totally accept these conditions to concrete the transaction," COFECE said, adding that Mexican law "grants them the right" to appeal the decision to the federal judiciary.
Plastics News attempted to reach Profluent and PTM for comment without success. Australis, which has offices in New York and Santiago, Chile, did not immediately return a phone call.