Thyssenkrupp Files Complaint Against European Commission’s Decision On Tata Steel JV
European Commission had prohibited formation of a joint venture of Thyssenkrupp with Tata Steel saying it would hurt competition.
Thyssenkrupp AG moved a European court to dispute a decision that blocked a planned joint venture with Tata Steel Ltd., in a move that may offer some relief to India’s oldest steelmaker which is looking to pare debt.
“The consolidation of the European steel industry is still right and necessary which is also shown by the current critical market situation for steel manufacturers. Overcapacities and high import pressure from Asia create an environment in which the planned joint venture with Tata Steel would not have impaired competition,” the German steelmaker said in a media statement. “We regret the European Commission’s decision and regard it as too far-reaching and wrong.”
The European Commission in June had prohibited the formation of a flat steel joint venture of Thyssenkrupp with Tata Steel stating it would hurt competition in the continent in certain grades of the metal and the remedies offered by the parties weren’t enough.
“Thyssenkrupp doesn’t share the European Commission’s concerns,” it said in the statement. “The commission did not take adequate account of the structural importance of imports into Europe, buyer-side purchasing power and possible substitutions with alternative packaging materials and alternative galvanising methods.”
A collapse of the planned joint venture had created uncertainties over Tata Steel’s debt reduction plan. The deal would have transferred some of Tata Steel’s debt to the merged entity, allowing it to focus on the domestic market. The debt of Tata Steel’s European division stands at 2.2 billion euros ($2.5 billion). Most brokerages, too, cut their target prices for Tata Steel after the deal collapsed. The domestic company, however, maintained its plans to lower debt by deleveraging, including a 25 percent cut in capital expenditure.
Tata Steel has been trying to find a solution for its European business since being hit by the 2016 commodity crisis. The Indian steelmaker bought Corus Group Plc for about $13 billion in 2007 to gain control of its European units but has been closing and selling plants in the U.K. since the 2008 financial crisis to make the business more profitable.