Birla’s Columbian Chemicals acquisition cleared by EC

The European Commission has cleared the proposed acquisition of US-based Columbian Chemicals by Indigold Carbon, which is controlled by the Indian Aditya Birla Group, both worldwide producers of carbon black. Even though the Commission concluded that the merger would create one of the three largest companies in the carbon black sector, approval was granted under the EU Merger Regulation as it is believed European customers will “continue to enjoy healthy competition.”

Although both companies involved in the deal are domiciled outside of the European Union, the acquisition, which will bring together two of the world’s four largest producers of carbon black, was submitted to the European Commission for clearance on  May 5, 2011 as the companies conduct significant business in Europe. The Commission examined the impact in the European Economic Area and concluded that European customers would still be able to source carbon black from different suppliers across the EEA and beyond. In particular, continued competition would remain from different producers located within the EEA and from direct imports from Russian and Ukrainian manufacturers.

The current tight supply of carbon black within Europe is attributable to the recession and the consequent reduction in production capacity, the Commission noted in announcing its approval, adding that it found this potential merger had “no significant impact” on production levels that were rather cyclical in nature and that production capacity is likely to respond to the recovery of demand. The Commission therefore concluded that the transaction would not significantly impede effective competition in the EEA or any substantial part of it.