Credit: Original article can be found here
The Commerce Commission has granted clearance for Sika AG
to acquire the MBCC Group subject to divesting certain
assets of MBCC, including the entirety of MBCC’s business
in New Zealand (Divestment Undertaking).
Both parties
manufacture chemical admixtures, which are ingredients used
in the production of concrete. They also supply other
construction material-related products.
The parties
are the two largest competitors for the supply of chemical
admixtures in New Zealand, accounting for a very high
combined share of supply. They are also the only two
locally-based suppliers, which gives them a cost-advantage
over their competitors, who import products.
The
Commission therefore had concerns that competition lost with
the merger would be substantial.
To address the
competition concerns raised in New Zealand and in other
jurisdictions, Sika has agreed to divest the entire MBCC
business in New Zealand and Australia and the chemical
admixtures business of MBCC in the United Kingdom, European
Union, United States and Canada. The divestment includes
research and development facilities, including MBCC’s
global research and development facility in Trostberg,
Germany.
“Sika and MBCC are by far the largest
suppliers of admixtures in New Zealand. Admixtures are an
important input in the manufacture of concrete, and
therefore a high importance product for the building
industry,” said Commissioner Dr Derek
Johnston.
“Without the divestment, we are concerned
that existing competitors or potential entrants would not
provide enough competition to prevent Sika from raising
prices or decreasing quality to customers.”
Dr
Johnston said that the sale of the entire New Zealand MBCC
business to a third party satisfied the Commission that the
Proposed Acquisition is unlikely to substantially lessen
competition.
“We consider that the divestment will
mean that the competition lost with the Proposed Acquisition
will be replaced by the purchaser of MBCC’s New Zealand
business. Furthermore, the divestment of research and
development facilities will enable the business to continue
innovating. With this divestment, the Commission is
satisfied that the merger would not be likely to result in a
substantial lessening of competition.”
Under the
terms of the Divestment Undertaking, Sika is required to
obtain separate, formal approval from the Commission for the
divestment of the MBCC business to its preferred
purchaser.
A public version of the written reason for
the decision will be available on the Commission’s case
register in the near future.
Given the Commission
is yet to approve a purchaser of the MBCC business we will
not be commenting further at this
time.
Background
We will give clearance to a
proposed merger if we are satisfied that the merger is
unlikely to have the effect of substantially lessening
competition in a market.
Under the terms of the
Divestment Undertaking, Sika is required to apply to the
Commission for approval of the purchaser of the MBCC
business. The Commission will approve a purchaser of the
MBCC business if it is satisfied, among other things, that
the proposed purchaser has the financial resources, business
expertise and incentive to viably operate MBCC in
competition with Sika and that the proposed purchaser’s
acquisition of MBCC is not likely to create competition
concerns that would result in a contravention of s 47(1) of
the Commerce Act 1986.
Further information explaining
how the Commission assesses a merger application is
available on our website.