Clariant’s anticipated acquisition of Kilfrost’s de-icing and anti-icing fluids business faces being referred for an in-depth investigation by the CMA.
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Both companies supply aircraft de-/anti-icing fluids (ADF) in the UK. ADF is sprayed onto aeroplanes while on the ground in order to prepare them for take-off and flight in winter conditions.
The merger involves the 2 largest suppliers of ADF in the UK and the evidence gathered by the Competition and Markets Authority (CMA) shows that customers are concerned about the loss of competition and choice that could result if the merger is completed.
The CMA believes that there could be insufficient rivalry from other suppliers to offset this loss of competition and that expansion or new entry by other ADF suppliers is also uncertain.
The CMA has found that the transaction therefore gives rise to a realistic prospect of a substantial lessening of competition (SLC) in the supply of ADF, which could lead to higher prices or a reduction in choice and quality for customers nationally.
Other factors important to customers such as security of supply and innovation could also be negatively affected as a result of the merger.
The merger will therefore be referred for an in-depth phase 2 investigation by an independent group of CMA panel members unless Clariant offers undertakings which address the competition concerns (see notes for editors).
Andrea Coscelli, Executive Director, Markets and Mergers, and decision-maker in the phase 1 investigation, said: "This transaction will bring together the 2 largest suppliers of ADF in the UK.
"If Clariant no longer has to face its closest competitor and with lack of rivalry from other suppliers, our concern is that the merged company could raise prices or otherwise downgrade its service offering to customers – airlines, airports de-icing service providers and ground handlers.
"We therefore plan to refer the merger for an in-depth investigation unless Clariant offers acceptable undertakings to address our concerns." ■