Mergers: Commission clears acquisition of MBCC Divestment Business by Cinven
The European Commission has approved, under the EU Merger Regulation, the proposed acquisition of MBCC by Sika. The approval is conditional on the divestiture of MBCC’s global chemical admixture business.
Sika and MBCC are key innovators and global leaders in the development and supply of chemical admixtures and construction materials. The development of new polymers and new formulations of chemical admixtures play a key role in the concrete industry, in particular to address sustainability challenges, such as bio-based admixtures.
The Commission’s investigation
The Commission’s preliminary investigation showed that the transaction, as initially notified, would have substantially reduced competition and led to higher prices and less innovation in the European Economic Area (‘EEA’) in the markets for chemical admixtures and concrete admixtures.
The Commission’s investigation found that:
- The merged entity would have very large market shares and would only face competition from very few other competitors in the EEA markets for chemical admixtures.
- The markets for chemical admixtures are characterised by significant barriers to entry, such as the need to have a sufficiently large customer base, strong sales force and technical team, high volumes of orders and know-how to compete. Moreover, the market is characterised by strong brand loyalty.
The proposed remedies
To address the Commission’s concerns Sika offered to divest MBCC’s chemical admixture business in the EEA, Australia, Canada, New Zealand, Switzerland, the UK and US, including global research and development facilities.
The commitments consist of the structural divestiture of a stand-alone business, which fully removes the horizontal overlaps between the parties in chemical admixture markets in the EEA. This will enable a purchaser to run the divested business as viable competitive force in the market on a lasting basis. The Commission will closely monitor the divestment process, including the choice of any suitable purchaser for the divested businesses that will have to be approved by the Commission.
Following the market test, the Commission concluded that the proposed transaction, as modified by the commitments, would no longer raise competition concerns. The decision is conditional upon full compliance with the commitments.
During its investigation, the Commission cooperated closely with its counterparts in Australia, Canada, New Zealand, the UK and US. It will continue liaising with these counterparts during the assessment of a suitable purchaser for the divestment business.
Companies and products
Sika, headquartered in Switzerland, is active in the development, production and supply of chemical admixtures and other construction materials as well as roofing and waterproofing systems which are used globally in the building and manufacturing industries.
MBCC, headquartered in Germany, is a supplier of construction chemicals and solutions worldwide. It provides solutions for customers in the concrete manufacturing, cement and underground construction industries, and offers solutions to protect and repair buildings and structures.
Merger control rules and procedure
The case was initially notified on 7 June 2022. However, Sika withdrew the notification on 4 July 2022. The transaction was re-notified to the Commission on 12 December 2022.
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).