Kronospan/Constantia (European Commission, phase II)
Advisory Services
The Situation
On 4 May 2007, Kronospan Holding GmbH (a member of the Kronospan Group, headquartered in Austria) notified the European Commission of its contemplated acquisition of several business units from Constantia Industries AG, in particular Fundermax GmbH (Austria), Falco CC (Hungary), and Sprela GmbH (Germany). The acquisition gave rise to horizontal overlaps in raw and coated particleboard as well as decorative laminates and components.
Following strong customer concerns, the European Commission on 14 June 2007 initiated an in-depth investigation to examine the merged entity's particularly strong position concerning raw particle board in Austria, Hungary, and Slovakia. The merger had already gone into a phase 2 review by the Romanian Competition Council on 24 April 2007.
On 12 July 2007 the parties submitted a proposed merger modification to the European Commission (and shortly afterwards to the Romanian Competition Council), whereby Constantia would retain ownership of Fundermax and Kronospan would commit not to acquire Fundermax for a specified time period.
NERA's Role
NERA advised Constantia and Kronospan from the end of phase 1 to the investigation's conclusion. The economic analysis included an assessment of the merger modification, with focus on the incentives of Fundermax to redirect part of its sales towards the East so as to compete with the enlarged Kronospan.
The Result
In view of the modification to the originally notified transaction the Commission was satisfied that its concerns over non-coordinated and coordinated effects, as well as over potential vertical foreclosure, were no longer applicable. Accordingly, it cleared the merger on 19 September 2007, without issuing a statement of objections. The Romanian Competition Council had reached a similar finding and approved the modified transaction on 27 August 2007.
