Mergers: Commission opens in-depth investigation into proposed takeover of Constantia's particle board division by the Kronospan Group

  • Western Europe
  • 06/15/2007

The European Commission has opened a detailed investigation under the EU Merger Regulation into the planned acquisition of the raw and coated particle board business of Constantia Industries AG of Austria by Kronospan Holding GmbH of Germany, a member of the Kronospan Group. Both companies are active in the manufacture and supply of wood based products, in particular raw and coated particle board, decorative laminates and components. The in-depth investigation will enable the Commission to assess the effects of the proposed transaction on competition, notably in the raw particle board sector. The Commission now has 90 working days, until 19th October 2007, to take a final decision on whether the concentration would significantly impede effective competition within the European Economic Area (EEA) or a substantial part of it. The decision to open an in-depth inquiry does not prejudge the final result of the investigation.

Competition Commissioner Neelie Kroes said: “Following strong concerns raised by customers, the Commission must make sure that the quality and price of wood based products, which are an essential input for the European furniture industry, would not be adversely affected by this transaction”.

Raw particle board is used in furniture applications, for example for the production of upholstered furniture, shelves or worktops. Coated particle board is raw particle board that has been coated with impregnated decor paper and is used as a more value-added product for worktops and other furniture. Decorative laminates consist of several layers of craft and décor papers sealed together. They are used, for example, for shower cabins, facades and balconies. Components (also called “post-forming elements”) are pieces of raw particle board, which have been shaped to the required profile, for example the form of a window sill and to which laminate has been glued.

The Commission has serious doubts as to the compatibility of the intended transaction with the Single Market, given the risks that it might significantly impede effective competition in the area of raw particle board. The new entity would have a particularly strong position concerning raw particle board in Austria, Hungary and Slovakia.