Danish authority ends NDI acquisition case as Euromaster prepares to leave

The Danish Competition and Consumer Authority has suspended its investigation into the planned NDI Group acquisition of Euromaster Danmark. Following the collapse of the two companies’ planned merger, the Euromaster Group announced that it will “not continue its activities in Demark” after the end of 2023.

The Authority, which believed the merger of the two businesses could harm competition, reported on 10 August that it had ceased work on the case after the NDI Group withdrew its notification to acquire.

“As a competition authority, we have had concerns about the merger, as our investigations have shown that it could harm competition,” states Christian Shultz, chairman of the Competition and Consumer Authority. “The parties have not presented us with solutions that could remove these concerns. We have now suspended our work because NDI Group has withdrawn its merger notification.”

Work suspended without decision

NDI Group notified the Danish Competition and Consumer Authority of its intention to acquire Euromaster Danmark in November 2022. Over the following months the Danish Competition Council, the country’s principal enforcer of competition law, discussed the proposed merger. NDI Group withdrew its notification on Wednesday 9 August, and the Danish Competition and Consumer Authority has suspended processing work on the merger without making a decision. Euromaster Danmark had already announced on 30 June that the merger would not take place.

Denmark’s competition authorities are obliged to prohibit any merger that significantly impedes competition. The Danish Competition and Consumer Authority conducted extensive market surveys, including consultation with customers and competitors. It also performed economic analyses. On the basis of these surveys and analyses, the Authority expressed its concerns regarding competition should the merger take place.

NDI Group and Euromaster Danmark are active in the retail sale of replacement tyres for heavy vehicles such as trucks and buses, construction machinery and agricultural vehicles, as well as for passenger cars and light commercial vehicles. The two companies also offer tyre services, and both are among the largest players in the Danish market. The Danish Competition and Consumer Authority states that its investigations showed that customers would “lose a significant alternative” if the merger was authorised without intervention.

When the Danish Competition and Consumer Authority receives a merger notification, statutory deadlines exist for when a decision must be made. In this case, the deadlines were put on hold for a longer period of time. This is partly due to an appeal before the Danish Competition Appeals Tribunal regarding the timing of the merger notification, and partly because the Danish Competition and Consumer Authority had been awaiting information from the involved parties.

Euromaster to sell Danish assets

Commenting on the collapse of a transaction that would have created “the industry’s best tyre and automotive repair chain,” Euromaster notes that restrictions imposed by the Danish Competition and Consumer Authority left NDI Group “with no strategic or economic reasons to continue the original agreement.”

Based on the Authority’s decision, the Michelin-owned Euromaster Group has decided not to continue its activities in Denmark after the end of 2023. Voicing its “great confidence in the strength and value of the Euromaster network in Denmark,” Euromaster says it will “carefully consider any new opportunities to divest its Danish assets” while keeping a focus on employees and customers as a top priority. According to Euromaster Danmark, the local network consists of 37 outlets.

“Although the Danish Competition and Consumer Authority’s decision did not turn out as we hoped, it does open up new opportunities for Euromaster, which we are now working on to ensure the best possible outcome for all our stakeholders,” comments Benoît Heubert, chief executive officer of the Euromaster Group. “This includes a possible new agreement with NDI, which covers some of our activities.”

Heubert states that “taking care of our employees and supporting them in the best possible way” during any transition phase will be “the focus of every decision we make.” He also emphasises that as long as Euromaster operates in Denmark, it will continue to serve customers “with the same level of commitment, safety, quality and expertise.”

The Euromaster Danmark A/S Annual Report 2022 shows a loss of DKK -46.3 million (-£5.3 million) in the year ended 31 December 2022, a result that follows several consecutive years of losses. For this year, company management expected (prior to the collapse of the planned merger) a result “that is in line with the performance of 2022.”