Thyssenkrupp-Tata Venture Becomes Vestager’s Sixth Deal Veto
Allowing the Tata Steel-Thyssenkrupp merger deal to proceed would have reduced suppliers and increased prices for steel, EU says.
(Bloomberg) --
Thyssenkrupp AG and Tata Steel Ltd.’s collapsed joint venture was formally blocked by the European Union, the sixth deal vetoed by antitrust chief Margrethe Vestager, whose tough stance may bolster her chances of landing a top EU job.
Allowing the deal to proceed would have reduced the number of suppliers and increased prices for steel used in packaging and in the car industry, the EU said in an emailed statement. Tuesday’s decision comes weeks after the companies threw in the towel, citing insurmountable antitrust concerns. The duo opted against offering concessions to tackle the outstanding issues.
The failure of the tie-up has been costly for the two companies, putting in doubt the future of Tata’s two giant European plants and ending Thyssenkrupp’s plans to split itself in two. Tata now has "limited options" for its European business which may mean looking for a non-European buyer to clear regulatory hurdles, its chief executive officer said.
“As the companies did not offer remedies to fully address our competition concerns, we had to block the merger,” Vestager told reporters in Brussels. "This would have harmed European competitiveness in these sectors and led to higher prices for consumers buying canned food and cars."
The EU rejected arguments that steel from China and other parts of the world competed with the two European product lines where it saw antitrust issues. The quality demanded and short delivery times for supply chains means customers can’t turn to commodity steel, it said. The deal would have created a market leader for tinplate, Europe’s most important packaging steel, and would have knocked out an important supplier of galvanized steel for the car industry, according to the regulator.
Thyssenkrupp had expected the formal merger refusal, the company said in a statement, not adding any further comment. It has previously said it would work on an alternative plan for its steel division in the coming months.
Tata’s European division didn’t immediately respond to a request for comment.
Political Row
Vestager landed herself in a political row with France and Germany by blocking Siemens AG and Alstom SA’s project to create a European rail giant. She’s defended tough merger oversight as necessary to ensure customers have a choice of companies and don’t face price increases from an over-powerful firm.
Even difficult deals can win approval if companies are willing to make the concessions the EU is looking for. A deal combining two of the biggest suppliers of industrial gas wriggled through last year with a sale of one’s European business to a smaller rival. Deutsche Boerse AG’s planned takeover of London Stock Exchange Group Plc fell at a final hurdle when it refused to sell part of the business to appease regulators.
Vestager said the veto is only the EU’s 10th in ten years, with more than 3,000 deals winning approval and 90% of those without any conditions. Regulators always apply the same principles to "ensure that European consumers are not harmed through higher prices, limited choice or less innovation."
Vestager’s Merger Vetoes
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Thyssenkrupp and Tata offered in April to sell assets in Belgium, Spain and the U.K. Facing negative feedback, they said in May that yielding any more would have undermined the business case for the deal. Vestager said the offer represented "only a small part of the overlap between their activities" and the companies would have kept their best production activities. A potential buyer of the assets would have relied on the merged firm for critical supplies, meaning it could not have challenged it effectively.
--With assistance from William Wilkes and Elena Mazneva.
To contact the reporter on this story: Aoife White in Brussels at awhite62@bloomberg.net
To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Peter Chapman, Lynn Thomasson
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