Mergers: Commission approves proposed acquisition of Abieta by Arizona
- Germany
- 01/16/2009
The European Commission has cleared under the EU Merger Regulation the proposed acquisition of Abieta Chemie GmbH of Germany by the Arizona Chemical group of the US. The Commission concluded that the operation would not significantly impede effective competition in the European Economic Area (EEA) or in any substantial part of it.
Arizona is one of the world’s largest producers of naturally derived specialty resins used, inter alia, in adhesives. It also refines processes and sells oleochemicals. Abieta is a leading European rosin upgrading company, specialised in the production and sale of disproportionated rosin and disproportionated rosin soaps. Rosin is the resinous constituent of the oleo-resin exuded by various species of pine, known commercially as crude turpentine. Rosin is used as an emulsifier in emulsion polymerisation, mainly in the rubber industry.
The concentration does not meet the turnover thresholds of the EU Merger Regulation but has been dealt with by the Commission following a referral requested by the parties, agreed by the Member States concerned, under Article 4(5) of the Merger Regulation.
The parties’ activities overlap horizontally in the markets for the manufacturing and sale of rosin emulsifiers for emulsion polymerisation and grip enhancing resins.
As regards emulsifiers, where the parties’ combined market share is significant, the Commission’s investigation revealed a significant excess in production capacity in the market. The Commission’s investigation also pointed to strong customers’ bargaining power and sufficient alternative supply sources for customers.
As regards grip enhancing resins, the proposed transaction would not significantly modify the structure of the relevant markets as the increment in market shares is negligible and a number of credible competitors would continue to exercise a competitive constraint on the merged entity.
The Commission noted that the proposed transaction would give rise to a vertical relationship because Arizona is active in the rosin market, which is upstream of the emulsifiers and the grip enhancing resin markets. However, it concluded that the transaction would not involve any risk of closing off supplies in the EEA, because of Arizona’s low market share in the rosin market and Abieta’s insignificant position as a purchaser of rosin.
