3rd Sep 2015 05:25
BRUSSELS (Alliance News) - The European Commission on Wednesday said it has opened an in-depth investigation to assess whether the proposed acquisition by Mondi PLC of two industrial packaging plants currently owned by Walki is in line with the EU Merger Regulation.
The Commission indicated concerns that Mondi's acquisition of two of Walki's packaging plants could lead to less choice and higher prices for customers of certain packaging materials, used for example to transport and protect fresh food or paper.
Mondi is a vertically integrated packaging and paper manufacturer, and also operates a number of plants across Europe, manufacturing extrusion coating products. The plants Mondi intends to buy from Walki also manufacture extrusion coating products.
The Commission has concerns that the removal of a key competitor may lead to less choice and ultimately higher prices for customers of wrapping materials which also serve as moisture barriers.
The Commission now has 90 working days or until January 18, 2016, to investigate whether these initial concerns are confirmed. The opening of an in-depth investigation does not prejudge the outcome of the investigation.
Commissioner Margrethe Vestager, in charge of competition policy, observed: "The proposed merger could remove a key competitor for several types of packaging material. These are used in everyday items such as food packaging. I am concerned that the merger would lead to higher prices and less choice for these companies' clients and that the price increases could ultimately be passed on to consumers."
The Commission's initial investigation showed the proposed acquisition of Walki's plants may remove a major competitive constraint on Mondi. Remaining competitors would have considerably lower production capacity than the merged entity and may not be able to match its product offering or proximity to key customers.
At this stage, the Commission has concerns that these competitors may be unable to exert sufficient competitive constraint on the behavior of the merged entity. These risks will likely lead to a reduction of choice for customers and potentially to price increases for the products concerned.
The Commission will now investigate in-depth the effects of this transaction on competition to determine whether its initial concerns are confirmed.
Copyright RTT News/dpa-AFX
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