Anticipated acquisition by Prince Minerals Limited of Castle Colours Limited

Affected market: Clay stains and additives

No. ME/4072/09

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, jurisidction, third party views, assessment and decision.

The OFT's decision on reference under section 33(2)(a) given on 6 May 2009. Full text of decision published 22 May 2009.

Please note that the square brackets indicate figures or text which have been deleted or replaced in ranges at the request of the parties or third parties for reasons of commercial confidentiality.

PARTIES

Prince Minerals Limited (Prince) is a subsidiary, acquired in 2006 from Tarmac Limited, of the US company Prince Minerals Holding Corp. Its principal business activities comprise the sourcing and processing of minerals and compounds and the onward supply to customers in a wide variety of industries - including brick and tile manufacturers  - in the UK and in parts of mainland Europe.

Castle Colours Limited (Castle) sources, processes and supplies minerals and compounds used to condition and colour clay products - principally bricks and tiles. The parties estimate that Castle's turnover for the year ended 31 December 2008 amounts to [less than £6] million.

TRANSACTION

Prince is proposing to acquire the entire issued share capital of Castle. The completion of this transaction is conditional on obtaining competition authority clearance. Prince notified the anticipated acquisition on 5 March 2009. The extended administrative target date for the OFT's decision on reference to the Competition Commission is 6 May 2009.

JURISDICTION

As a result of this transaction, Prince and Castle will cease to be distinct. The share of supply test in section 23 of the Enterprise Act 2002 (the Act) is met on the basis of the parties' overlap in the supply of additives including pigments (stains) used to colour the surface of bricks and tiles. Such overlap would give rise to a combined share of around [60-75] per cent of the supply in the UK. 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.

THIRD PARTY VIEWS

Comments from third party customers and competitors have been addressed where appropriate throughout this decision.

ASSESSMENT

Prince and Castle overlap in the supply of additives and stains - specifically: barium, manganese and non-calcined clay stains - used in the production of clay bricks and clay tiles.

The OFT considers that the merger will not give rise to a realistic prospect of a substantial lessening of competition in the UK supply of barium or of manganese.

In the case of barium, there would be only a very small increment of less than one per cent in the merged entity's share of [35-40] per cent of the total UK supply. Third parties were generally unconcerned by the merger.

In the case of manganese - where the merger would bring about an apparent increment of [10-15] per cent of a combined share of [70-80] per cent of the total UK supply - evidence from customers supports the parties' proposition that Prince is no longer an active competitor in this segment but has merely continued with the ex-gratia supply to five customers in the UK.

The OFT does, however, consider that the merger raises a realistic prospect of a substantial lessening of competition in the supply of non-calcined clay stains. This is on the basis of (a) very substantial combined market shares of [greater than 70] per cent (an increment of [15-25] per cent), (b) a body of third party concerns with regard to the ability of the merged entity to raise prices, (c) evidence pointing to barriers to timely de novo market entry and to expansion within this particular market segment, and (d) a lack of evidence of sufficient countervailing buyer power.

Consequently, the OFT believes 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.

However, taking a number of relevant factors into consideration, the view of the OFT is that the market concerned in this particular case is of insufficient importance to justify the making of a reference.

DECISION

This merger will therefore not be referred to the Competition Commission pursuant to section 33(2)(a) of the Act.

Back to top