Anticipated acquisition by Altana AG of certain assets of Wolstenholme Group Ltd

Affected market: Metallic effect pigments and metallic effect pigment inks

No. ME/3077/07

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, jurisdiction, assessment and decision.

The OFT's decision on reference under section 33(1) given on 16 August 2007. Full text of decision published 22 August 2007.

Please note that square brackets indicate figures or text which have been deleted or replaced with a range by the OFT or at the request of the parties for reasons of commercial confidentiality or public interest.

PARTIES

Altana AG (Altana) is a German based management holding company which, through a number of subsidiaries, manufactures specialty chemicals, including metal effect pigments, for ink and coatings manufacturers, coatings and plastic processors and the electronics industry. Altana also holds minority stakes in competing suppliers Carl Schlenck AG, Aldoro Ltd and Metapol SA. In this case, it has not been necessary to conclude whether these suppliers should be considered as independent from Altana for the purposes of this assessment as it does not materially change the analysis.

Wolstenholme Group Ltd (Wolstenholme) is a UK based company which manufactures a range of metallic pigments in various forms and metallic effect pigment inks. Wolstenholme's latest annual report showed a UK turnover of [less than £70 million] in 2006.

TRANSACTION

Altana proposes to acquire the metallic pigments and metallic effect pigment inks business of Wolstenholme by way of an asset purchase[note 1]. 

The parties submitted a satisfactory submission to the OFT on 22 June 2007. The extended administrative deadline is 20 August 2007.

JURISDICTION

As a result of this transaction Altana and the Wolstenholme assets being acquired will cease to be distinct. The parties overlap in the supply of metallic effect pigments and metallic effect pigment inks. The parties estimated that they have a combined share of the metallic effect pigments market in the UK in excess of 25 per cent (increment of [0-10] per cent). As a result the share of supply test in section 23 of the Enterprise Act 2002 (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.

THIRD PARTY VIEWS

The OFT received comments from a number of competitors and customers. In summary, only three third parties raised concerns over the effect of the merger in the metallic effect pigment market. However, these concerns were inconsistent with other third parties and independent industry reports.

Third party comments regarding metallic effect pigment inks were more mixed. The majority of third parties indicated that the merging parties were the largest suppliers and that there could be a decrease in competition, but few said that they were concerned by the merger, mainly due to the small proportion of business for which metallic effect pigment inks account. On further questioning, some ink manufacturers were found to produce their own metallic effect pigment inks and many believed they could switch to smaller suppliers due to low barriers to expansion.

ASSESSMENT

The parties overlap in the supply of metallic effect pigments and metallic effect pigment inks.

Metallic effect pigments

The parties will be the largest supplier of metallic effect pigments post-merger holding a global share of supply of [20-30] per cent (with an increment of [0-10] per cent). A number of competing suppliers worldwide that have been identified by third parties will be expected to continue to provide a competitive constraint. On this basis, the OFT considers that there is no realistic prospect that the merger will result in a substantial lessening of competition in the supply of metallic effect pigments in the UK.

Metallic effect pigments inks

Third parties identified the parties as the main suppliers of metallic effect pigment inks. However existing EU manufacturers of metallic effect pigment inks, while smaller than the parties, have indicated that expansion would be easy and two have indicated that they see the merger as an opportunity to obtain more business. Further, suppliers from the Far East and US can be expected to start or increase supply into the EU. On this basis, the OFT considers that there is no realistic prospect that the merger will result in a substantial lessening of competition in the supply of metallic effect pigment inks in the UK.

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 under section 33(1) of the Act.

NOTE

1. The transaction does not include Wolstenholme's carbon black dispersions business, its businesses carried out under the brand name 'Ronald Britton' and the business selling and distributing aluminium products manufactured by Metaflake Limited.

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