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EC approves merger between chemical producers Reichhold and Polynt, subject to conditions
The European Commission has approved under the EU Merger Regulation the merger between chemical producers Reichhold (US) and Polynt (Italy). Both produce unsaturated polyester resins, used to make reinforced plastics. The decision is conditional on divestment of Reichhold's Etain plant in France.
Both Reichhold and Polynt are active in the manufacturing of chemicals. Both companies produce and sell unsaturated polyester resins, a critical input for many industries. These resins are used to make products such as cultured marble and solid surface counter tops, automotive repair putty and other products, such as bowling balls and buttons. When combined with fiberglass or mineral fillers, the resins are resistant to corrosion and fire and used to manufacture windmill blades, as well as in the construction, marine and land transportation industries.
Following the market investigation, the Commission concluded that the transaction, as notified, raised competition concerns in the market for the production and sale of unsaturated polyester resins. This is notably in view of the relatively high combined market shares of the merged entity and its extensive network of plants, as compared to its main competitors.
The proposed remedies
To address the competition concerns identified by the Commission, Reichhold and Polynt offered to divest Reichhold's largest unsaturated polyester resin plant, in Etain, north-east France, together with the plant's customer and product information.
Reichhold and Polynt have proposed Ashland as the buyer of the Etain plant. Ashland has an established presence in the European Economic Area (EEA) market for unsaturated polyester resin. Reichhold and Polynt can only implement their merger once the Commission has formally assessed and approved the divestiture to Ashland.
The commitments fully address the Commission's competition concerns.
The Commission therefore concluded that the proposed merger, as modified by the commitments, would no longer raise competition concerns. The decision is conditional upon full compliance with the commitments.
Companies and products
Polynt, of Italy, is active in the development, production and distribution of specialty chemicals and performance chemicals. Polynt is also active in the production of unsaturated polyester resins. It is controlled by Investindustrial, a Luxembourg-based holding company.
Reichhold, of the US, is a manufacturer and supplier of resins used in composites and coatings. It is controlled by US-based Black Diamond, an investment advisory firm registered with the US Securities and Exchange Commission.
Merger control rules and procedures
The transaction was originally notified to the Commission on 26 October 2016, but subsequently withdrawn on 24 November 2016. It was notified again on 17 March 2017. It was also notifiable in numerous jurisdictions worldwide.
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II). This deadline is extended to 35 working days in cases where remedies are submitted by the parties, as in this case.
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