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The Competition Commission (CC) has provisionally ruled that the merger between kaolin suppliers Imerys Minerals Limited and Goonvean Limited could lead to a loss of competition and higher prices for some of their customers.

Kaolin, also known as ‘china clay’, is a mineral used in the manufacture of a range of end-products such as sanitaryware (bathroom fixtures like sinks, baths and toilets), tableware, paper products as well as paints and adhesives (‘performance-mineral applications’) and pharmaceuticals, crop protection and animal feed (‘life-science applications’). Pre-merger, the parties were both active in the extraction, processing and supply of kaolin products from deposits and production facilities located in Cornwall.

In a summary of its provisional findings report published yesterday, the CC has provisionally found that the merger would effectively leave the merged company as the only UK kaolin supplier to tableware manufacturers and that there would be similar loss of competition in the market for the supply of kaolin for certain performance-mineral applications.

The CC has not found a substantial lessening of competition in the other product markets—kaolin for paper products, sanitaryware or by-products from the extraction process.

The CC has also published a Notice of possible remedies, which sets out options for addressing the loss of competition—including whether a partial sell-off of the Goonvean business or behavioural measures to protect customers from price rises or product withdrawal could be alternatives to a full reversal of the acquisition.

Simon Polito, CC Deputy Chairman and Chairman of the Imerys/Goonvean Inquiry Group, said:

‘Kaolin is used in a wide range of end-products and is processed specifically to meet these particular requirements. As a result of our assessment, we have provisionally found that UK customers have few alternative options, and in two of these markets, tableware and performance minerals, the parties are effectively the only UK suppliers.

‘We want to look at ways we can stop those customers facing resulting higher prices and possible disruption to the supply of kaolin products. We are conscious that we have only provisionally found a problem across some of the products supplied by the merged businesses so we do want to look closely at alternatives to a full sell-off of Goonvean but which will still protect the interests of these customers.'

The Office of Fair Trading (OFT) referred the case to the CC in April and the CC is expected to publish its final report by 17 September 2013.

The full provisional findings report will be published shortly. Comments are now invited on the provisional findings report by 14 August 2013 and the notice of possible remedies by 7 August 2013. To submit evidence, please email Imerys-Goonvean@cc.gsi.gov.uk or write to:

Inquiry Manager
Imerys/Goonvean merger inquiry
Competition Commission
Victoria House
Southampton Row
LONDON
WC1B 4AD

Notes for editors

1. The CC is an independent public body, which carries out investigations into mergers, markets and the regulated industries.

2. The members of the Inquiry Group are: Simon Polito (Chairman of the Group), Thomas Hoehn, Jill May and Graham Sharp.

3. The CC received new information from the parties regarding their supply of hydrous kaolin for use in refractory applications, boiler additives and reinforced fibreglass. As this information was received late in its inquiry, it could not be properly assessed in advance of the publication of its provisional findings report. The CC will proceed to assess this new information and has today published an issues statement in this regard requesting comments by 7 August 2013. The CC will publish an addendum to its provisional findings report relating to this matter in due course.

4. The Enterprise Act 2002 empowers the OFT to refer to the CC completed or proposed mergers for investigation and report which create or enhance a 25 per cent share of supply in the UK (or a substantial part thereof) or where the UK turnover associated with the enterprise being acquired is over £70 million.

5. The CC has a 24-week period in which it is required to publish its report, which may be extended by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.

6. Further information on this inquiry, including the terms of reference and other key documents, as well as on the CC and its procedures, including its policy on the provision of information and the disclosure of evidence, can be obtained from the CC website at: www.competition-commission.org.uk.

7. Enquiries should be directed to Rory Taylor or Siobhan Allen or by ringing 020 7271 0242.s