The European Commission will not allow the proposed merger between German steelmaker ThyssenKrupp and Tata Steel’s European operations to go ahead, because the firms did not adequately offer to remedy the expected reduction in competition and resulting higher steel prices.
The decision aims to protect competition in European steel markets and ensure that the automotive and packaging industries are not threatened, the commission said. Tata and ThyssenKrupp are the third and second largest European producers, respectively.
The commission began an in-depth investigation into the proposed joint venture at the end of October, but had to pause it in December because the firms did not supply certain information in a timely manner. It reopened the investigation on 15 January and on 1 April the two steelmakers submitted a package of commitments to address the commission’s concerns.
But on 10 May, ThyssenKrupp and Tata said they expect the commission to block the merger, as it required further commitments by the companies that they believed would make the joint venture economically unviable. ThyssenKrupp said it would instead focus on an initial public offering of its elevator manufacturing business, while Tata remains committed to deconsolidating its European assets.
The commission said that it received feedback from a large number of packaging and automotive industry customers who were concerned about higher steel prices for metallic coated and laminated steel products — notably tinplate — and hot-dip galvanised steel.
And the commission said that imports from third countries would not be able to compensate for increased local prices, because of quality requirements and longer delivery times.
In addition, the firms’ proposed divestments were inadequate to meet the commission’s demands, and did not include any assets, producing the raw materials necessary for galvanised products and tinplate.