EC approves acquisition of Houghton by Quaker, subject to conditions
Staff Writer |
The European Commission has approved, under the EU Merger Regulation, the acquisition of Houghton by Quaker, both producers of industrial lubricants.
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The decision is conditional on the divestment of Houghton's EEA businesses related to certain lubricants used to produce steel and aluminium.
Quaker and Houghton are both active globally in the development, production and marketing of industrial lubricants. In particular, both companies are active in the supply of rolling oils.
Rolling oils are particular types of metal working fluids used in the production of metals, such as aluminium and steel.
They are specifically designed for the particular metal being produced (for example, aluminium or steel) and the rolling operations involved in the production process (hot rolling or cold rolling).
These products play a critical role, since they have a direct impact on the quality of the metals produced. Customers of rolling oils produce aluminium and steel for various industries, including automotive, aerospace, and food and beverage.
The Commission was concerned that the takeover, as originally notified, would lead to a loss of competition in the markets for the supply of certain rolling oils in the European Economic Area (EEA).
In particular, the Commission's market investigation found that the EEA markets for the supply of (i) Aluminium Hot Rolling Oils (“AHROâ€), (ii) Steel Hot Rolling Oils (“SHROâ€), and (iii) Steel Cold Rolling Oils (“SCROâ€) are highly concentrated, and that Quaker and Houghton closely compete on these markets.
These rolling oils are based on complex product formulations, which are adjusted to the specific needs of the mills where they are used. Therefore, it is particularly difficult for customers to switch suppliers and the barriers to entry are high.
In light of these elements, the Commission considered that the proposed acquisition would have likely led to higher prices and reduced quality of the products and services provided to customers. ■