EC approves BASF's acquisition of Solvay's nylon business, subject to conditions
Staff Writer |
The European Commission has approved, under the EU Merger Regulation, the proposed acquisition of Solvay's nylon business by BASF.
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The approval is conditional on the divestiture of a remedy package.
Nylon compounds are used in a wide range of applications, particularly in the automotive and electronics industries, due to their light weight and good thermal resistance.
They are among the advanced materials used to develop lighter cars which produce less noxious emissions. Nylon fibres are used in particular for clothing and sportswear. The manufacture of nylon compounds and nylon fibres requires as a key input Adiponitrile ("ADN"), an oil derivative.
BASF and Solvay have dominant or strong market positions throughout the nylon value chain, and in particular the value chain of a type of nylon called “nylon 6.6â€.
Following its in-depth market investigation, the Commission identified the following competition concerns with the transaction as originally notified:
- It would lead to a reduction of the number of suitable suppliers and likely price increases in a number of markets related to the nylon industry in the European Economic Area (EEA): the markets for ADN, a key upstream input for the nylon 6.6 value chain, but also hexamethylene diamine, adipic acid, hexamethylenediamine adipate salt, nylon 6.6 base polymer, nylon 6.6 engineering plastics and nylon 6 3D printing powder.
- Due to the limited number of suppliers of intermediate products, the merged entity would also have the ability and incentive to restrict its competitors' access to essential inputs including ADN, hexamethylene diamine, adipic acid, hexamethylenediamine adipate salt, and nylon 6.6 base polymer in the EEA.
In addition, there was no indication that the existing level of competition could be maintained by new entrants because of high barriers to entry in these markets. In particular, access to essential inputs is limited and critical to be able to compete effectively.
To address the Commission's competition concerns, BASF and Solvay offered the following commitments:
- The divestiture of Solvay's facilities at Belle-Etoile and Valence (France), Gorzow (Poland), and Blanes (Spain) to a single suitable buyer. These facilities produce hexamethylene diamine, hexamethylenediamine adipate salt, nylon 6.6 base polymer, nylon 6.6 engineering plastics and nylon 6 3D printing powder.
- Long-term supply agreements for ADN to meet the divestment business' requirements.
The commitments fully remove the overlap between BASF and Solvay in the markets where the Commission had identified competition concerns.
Therefore, the Commission concluded that the proposed transaction, as modified by the commitments, would no longer raise competition concerns in the EEA. The Commission's decision is conditional upon full compliance with the commitments. ■