Affected market: Hydrocolloids
No. ME/1237/04
Please note that the full text of the decision can be downloaded by using the link on the right . What follows are extracts regarding the parties, the transaction, background, jurisdiction, assessment and decision.
The OFT's decision on reference under section 96 given on 22 September 2004
PARTIES
J.M. Huber Corporation (Huber) is a diversified US corporation active in a broad range of commercial activity including specialty chemicals, forestry and energy. CP Kelco APS (Kelco) is a Danish company specialising in the manufacture of additives used in the food, industrial, personal care and pharmaceutical sectors.
TRANSACTION
Huber already owns 28.6 per cent of the voting shares and 22.9 per cent of the non-voting shares in Kelco. Agreement was reached in July 2004 for Huber to acquire the remainder of the share capital in Kelco. Completion is subject to regulatory approval from the UK, US and German competition authorities. The target date is 30 September 2004.
Huber notified its proposed acquisition of Kelco by means of a Merger Notice under Section 96 of the Enterprise Act 2002 (the Act). The statutory deadline is 22 September 2004.
JURISDICTION
As a result of this transaction, Huber and Kelco will cease to be distinct. The parties overlap in the supply of hydrocolloids (see paragraph 5 of the full text) and the share of supply test in section 23 of the Act is met. The OFT therefore believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation.
ASSESSMENT
This pre-notified merger combines the parties' production and supply of hydrocolloids: specifically Huber's supply of CMC and Kelco's supply of biogums, pectin and carrageenan. Responses from third parties have confirmed that these products are not readily substitutable except for a few marginal applications. In effect, the merger does not give rise to horizontal overlap. Rather the merging parties' respective hydrocolloid products are widely held to be complementary.
Consequently, the OFT does not believe that it is or may be the case that the merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.
DECISION
This merger will therefore not be referred to the Competition Commission section 33(1) of the Act.
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