The European Commission has approved under the EU Merger Regulation the proposed acquisition of sole control of Cumerio SA of Belgium by Norddeutsche Affinerie AG (NA) of Germany. Both companies are active at several stages of the copper processing chain, in particular producing copper cathodes, copper rod and copper shapes. In September 2007 the Commission opened an in-depth investigation to check whether the proposed acquisition might significantly impede competition, in particular with regard to the European market for copper shapes. Copper shapes are formats cast from pure copper, which are called cakes when they have a rectangular section and billets when they have a circular section. However, the in-depth inquiry has shown that factors such as overcapacity on the market, very substantial in-house production of shapes by other firms, ease of entry and competition on the downstream markets of semi-finished copper products make it unlikely that the transaction would have harmful effects on consumers. The Commission has therefore concluded that the transaction would not significantly impede effective competition within the European Economic Area (EEA) or a significant part of it.
NA is a public limited company with several production facilities in Germany. NA produces copper cathodes which are further processed into copper rod and copper shapes. NA, through its subsidiary Prymetall and other shareholdings, is also active in downstream markets such as the production of copper shaped wires, pre-rolled strips and semi-finished copper products.
Cumerio is a public limited company with production facilities in Belgium, Bulgaria, Italy and Switzerland. Cumerio produces copper cathodes, copper rod and copper shapes, and further downstream, copper wires and profiles. Unlike NA, Cumerio is not active in the production of semi-finished copper products.
NA together with Cumerio would be the main supplier of copper shapes to other firms in the EEA (the merchant market), with Montanwerke Brixlegg AG as its main competitor. Montanwerke Brixlegg AG is a wholly owned subsidiary of the Austrian industrial group A-TEC Industries AG (A-TEC) which also holds minority shares in NA and Cumerio. The German Bundeskartellamt is currently investigating A-TEC's acquisition of the minority shareholding in NA.
However, the Commission's in-depth market investigation showed that its preliminary concerns that the proposed transaction might impede effective competition within the EEA could be ruled out. The Commission found that the production and use of copper shapes in the EEA is driven by competitive factors both upstream (development of the copper price) and downstream of the production of copper shapes. The fact that a number of firms are active at various stages of the processing chain is of particular importance. The Commission's market investigation found that the main characteristic of the consumption of copper shapes in the EEA is the high proportion of in-house consumption, which is nearly five times higher than merchant sales and would act as a considerable competitive constraint on the merchant market.
The market investigation also confirmed that the availability of a considerable amount of spare capacity for the production of shapes will continue to exert a competitive constraint on the new entity and prevent it from increasing prices of copper shapes. Even if prices on the merchant market for copper shapes increased, non-integrated users of copper shapes could integrate upstream and thus become active as producers of copper shapes. Finally, the market investigation confirmed that the downstream markets for semi-finished copper products are competitive and that this also exercises competitive pressure on the upstream market for copper shapes. [23 January 2008]