European Steel Merger Succumbs to Antitrust Decision -- WSJ

Date : 06/12/2019 @ 3:02PM
Source : Dow Jones News
Stock : ArcelorMittal (MT)
Quote : 13.084  -0.11 (-0.83%) @ 11:40PM
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European Steel Merger Succumbs to Antitrust Decision -- WSJ

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By Valentina Pop 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (June 12, 2019).

BRUSSELS -- The European Union's antitrust enforcer on Tuesday blocked the planned merger of the European steel businesses of India's Tata Steel Ltd. and Germany's Thyssenkrupp AG, saying the combination would reduce competition in the supply of special steel for the car and packaging industries.

"We prohibited the merger to avoid serious harm to European industrial customers and consumers," said competition commissioner Margrethe Vestager, adding that the two companies failed to propose sufficient remedies to address the EU's concerns.

Thyssenkrupp is currently Europe's second-largest producer of high-value steel, followed by Tata. Combined, they would have still ranked behind ArcelorMittal SA.

The antitrust decision, which was expected, marks another defeat for executives and politicians who have been promoting the formation of more European business giants to counter competition from the U.S. and China. It follows on the heels of a failed bid by Italy's Fiat Chrysler Automobiles NV to merge with French car maker Renault SA.

Ms. Vestager dismissed criticism that the European Commission has been a deterrent to European companies gaining scale to compete globally. She said that over the past 10 years the antitrust body has blocked only 10 mergers, while approving 3,000. She also noted that ArcelorMittal was allowed to buy Italy's Ilva, Europe's largest steel plant, after the parties to the deal offered concessions that allayed the commission's concerns.

Tata Steel said last month that the merger with Thyssenkrupp, announced in 2017, was off the table because the remedies demanded by the EC went beyond the "logic" of the deal.

In February, Ms. Vestager's office stopped plans to merge the train-making operations of Germany's Siemens AG with France's Alstom SA, a deal they said was necessary to be able to compete in the future with China's CRRC Corp., the world's largest rail supplier. The commission said the Franco-German merger would have harmed competition in the markets for high-speed trains and signaling systems.

As Europe's steel sector reels from U.S. tariffs imposed last year, Ms. Vestager said the decision to block the Tata-Thyssenkrupp merger will keep production sites open and allow European car makers and the packaging industry to source steel at competitive prices on the continent.

Anticipating the deal's rejection, Thyssenkrupp had abandoned a plan to split itself into two companies. Instead, the German company said it would pursue an initial public offering of its elevator business and explore partnerships for its industrial operations.

Ruth Bender in Berlin contributed to this article.

Write to Valentina Pop at valentina.pop@wsj.com

 

(END) Dow Jones Newswires

June 12, 2019 02:47 ET (06:47 GMT)

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