The European Commission has opened an in-depth investigation to assess the proposed acquisition of Alumetal by Norsk Hydro under the EU Merger Regulation.
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The Commission is concerned that the proposed acquisition may reduce competition in the production and supply of aluminium foundry alloys and master alloys in the European Economic Area (‘EEA').
Norsk Hydro and Alumetal are both producers of aluminium foundry alloys, which are semi-finished aluminium products used mainly by the automotive industry to cast auto parts. Alumetal makes these from recycled material. Alumetal also produces aluminium master alloys used to produce casthouse products such as aluminium foundry alloys.
The Commission has preliminary concerns that, by acquiring Alumetal, Norsk Hydro may reinforce its leading position as a supplier of aluminium foundry alloys, and may eliminate a growing competitor able to bring cheaper and advanced recycled aluminium products to the market.
The Commission's competition concerns
The Commission's initial market investigation raised concerns relating to the parties' strong market position in the supply of aluminium foundry alloys and aluminium master alloys, in particular in certain segments.
At this stage, the Commission is concerned that the transaction may lead to reduced choice and higher prices for foundry alloys and aluminium master alloys.
In particular, the Commission is concerned that:
• By acquiring Alumetal, Norsk Hydro would eliminate one of the most sizable and capable EEA-based competitors. Alumetal is an important competitive force with strong growth potential for the supply of advanced foundry alloys made from recycled aluminium, which are used to produce vehicles that are more fuel-efficient and therefore can reduce emissions. Access to recycled aluminium at competitive prices is essential for European automotive players to meet their climate targets.
• Following the combination of Alumetal's production of master alloys upstream and Hydro's production of casthouse products, there would be limited or no credible alternative master alloy suppliers remaining.
The Commission will now carry out an in-depth investigation into the effects of the proposed transaction to determine whether its initial competition concerns are confirmed.
The proposed transaction was notified to the Commission on 1 September 2022. Norsk Hydro and Alumetal decided not to submit commitments during the initial investigation to address the Commission's preliminary concerns.
The Commission now has 90 working days, until 22 February 2023, to adopt a decision. The opening of an in-depth investigation does not prejudge the outcome of the investigation. ■
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