Mergers: Commission opens in-depth investigation into Novelis’ proposed acquisition of Aleris

Commissioner Margrethe Vestager, in charge of competition policy, said: “European industries should be able to access aluminium products at fair prices to be able to compete in global markets. Our in-depth investigation aims to ensure that the acquisition of Aleris by Novelis does not have a negative impact on effective competition in aluminium markets and does not lead to less choice and higher prices for European industrial customers.”

Novelis and Aleris are both global manufacturers of aluminium flat rolled products with significant production facilities in the European Economic Area (EEA), in particular in Belgium ,Germany, Italy and the United Kingdom. With the proposed transaction, Novelis would reinforce its strong market position as a supplier of various flat rolled products.

The Commission’s competition concerns

The Commission’s initial market investigation raised several concerns resulting from the combination of both companies’ offer of aluminium automotive body sheets. These are metal sheets used in vehicles’ body structure and closures.

At this stage, the Commission is concerned that, following the transaction, customers would face a reduced choice in suppliers, as well as higher prices for aluminium automotive body sheets.

Customers for this product include various European companies active in the automotive sector, such as car manufacturers and other companies active in the automotive supply chain. The use of light materials, such as aluminium, allows car manufacturers to produce vehicles that are more fuel-efficient and reduce emissions. European industrial customers need to be able to source aluminium automotive body sheets at competitive prices, as many of them compete with imported products in the EEA, or export their products outside Europe and compete globally.

The Commission will also further investigate whether the transaction could have an effect on the supply and prices of certain aluminium flat rolled products used in other industries, such as building, construction and floor heating, where the activities of the companies also overlap.

The transaction was notified to the Commission on 18 February 2019. Novelis and Aleris have decided not to submit commitments during the initial investigation to address the Commission’s preliminary concerns. The Commission now has 90 working days, until 8 August 2019, to take a decision. The opening of an in-depth investigation does not prejudge the outcome of the investigation.

Companies and products

Novelis, headquartered in the US, is a global manufacturer of semi-finished aluminium products and recycler of aluminium. It operates several manufacturing facilities across North America, South America, Europe and Asia. Novelis is a subsidiary of Hindalco Industries Limited, an India-based supplier of aluminium and copper.

Aleris, headquartered in the US, is a global manufacturer of semi-finished aluminium products. It operates several production facilities in North America, Europe and Asia.

Merger control rules and procedures

The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.

The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).

In addition to the present transaction, there are currently four other on-going phase II merger investigations: the proposed acquisition of Innogy by E.ON, the proposed acquisition by Vodafone of Liberty Global’s business in Czechia, Germany, Hungary and Romania, the proposed acquisition of Whirlpool’s refrigeration compressor business by Nidecand the proposed creation of a joint venture by Tata Steel and ThyssenKrupp.

More information will be available on the Commission’s competition website, in the public case register under the case number M.9076.

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