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Britain's anti-trust regulator is calling for the EU to investigate Birla Carbon's $875-million acquisition of US firm Columbian Chemicals.
In a letter addressed to Mr Alexander Italiener, Director-General of Competition at the European Commission, last month, the Office of Fair Trading requested that the UK angle of the deal be investigated at the EU level. The commission has already been approached by Germany, the letter said.
Birla Carbon, the subsidiary of the Aditya Birla Group, acquired the Atlanta-based firm in January from One Equity Partners, the merchant-banking arm of J.P. Morgan Chase.
Columbian Chemicals is, like Birla Carbon, a producer of carbon black used in the production of tyres, plastics, cables and coatings. The acquisition leapfrogs the Indian firm from fourth to one of the top positions in this market globally.
Having the deal investigated at an EU level had the benefit of “a one-stop shop,” the possibility that the geographic area impacted was wider than just the UK and that the firm didn't have production facilities in Britain, said the OFT's Director of Mergers, Mr Sheldon Mills, in the letter dated March 25.
Birla Carbon acquired Columbian Chemicals through Netherlands-based Indigold Carbon. The OFT said it estimated that as a result of the deal, Birla Carbon would acquire an up to 35 per cent market share of all carbon black in the UK. The OFT considers that it is likely to have domestic jurisdiction in this case since the parties' combined share of the supply is estimated by them to be greater than 25 per cent for carbon black for tyres, carbon black for rubber, and for all carbon black.
The regulator pointed to the fact that Birla had widespread operations in Europe “including refilling stations in Spain, Italy, Belgium and the UK.”
“The OFT considers this evidence indicates that the proposed merger will affect trade between Member States,” said the regulator, adding that the investigation should examine whether the deal would lead to “unilateral effects.”
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