OFT refers joint venture between Kemira GrowHow Ojy and Terra Industries Inc. of their UK fertiliser and process chemicals businesses to the Competition Commission

11/07 26 January 2007

The OFT today referred to the Competition Commission (CC) the anticipated joint venture between Kemira GrowHow Oyj and Terra Industries Inc.

This joint venture combines the parties’ respective UK and Irish fertiliser and process chemicals businesses. The OFT has decided that the test for reference is met in relation to the supply of the following process chemicals: nitric acid, anhydrous ammonia, aqueous ammonia, liquid carbon dioxide and ammonium nitrate for non-agricultural applications to customers in the UK.

Vincent Smith, Senior Director for Competition at the OFT, said:

‘As customer concerns showed, this joint venture creates a monopoly in certain UK process chemicals markets with high entry barriers. However, the transaction raises no competition concerns in the fertiliser market, which is the principal business of the parties to the joint venture. The OFT seeks to resolve concerns in secondary markets that arise from a larger deal that is otherwise unproblematic through undertakings in lieu of a reference to the CC. We carefully explored the parties’ constructive remedies proposals. We ultimately concluded that the proposals offered might restore a second player in these markets, but one dependent for its supplies on its only other competitor, and therefore increased transparency and a risk of coordinated effects. We considered it appropriate in this case for the CC to examine the substantive issues and questions of remedy design in greater depth.’

The CC is expected to report by 12 July 2007.

NOTES

1. The Reference Test - the OFT has a duty to make a reference to the CC if the OFT 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; and the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

2. Under the Enterprise Act 2002 a relevant merger situation is created if two or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million; or as a result of the transaction, in relation to the supply of goods or services of any description, a 25% share of supply in the UK (or a substantial part thereof) is created or enhanced.

3. The CC may extend the 24 week period within which it is required to publish its report by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.

4. The text of this decision will be published in the mergers section as soon as is reasonably practicable.

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