European Commission prohibits joint venture between Tata Steel and ThyssenKrupp

European Commission prohibits proposed “Joint Venture” between, Tata Steel and ThyssenKrupp.

According to the European Commission’s investigation merger would have led to higher prices for steel products that are used as inputs by the packaging industry and car manufacturers. This would have harmed European competitiveness in these sectors and led to higher prices for consumers buying canned food or cars.

Commission further stated that, the proposed merger between Tata Steel and ThyssenKrupp would have brought together the second and third largest flat carbon steelmakers in Europe, behind ArcelorMittal

Reason for prohibiting the merger

For steel products used in the packaging sector, Tata and ThyssenKrupp proposed to divest only a small part of the overlap between their activities. The assets proposed for divestment were largely located in the UK or depended on intermediate steel products from the UK. The merged entity would have retained the best production assets of both companies.

For automotive steel products, the companies proposed to divest only limited capacities, which were insufficient for any competitor to act as a real challenger in this market.

Conclusion

The Commission concluded its decision by stating that,

“We are also equally concerned with protecting our steel industry itself from unfair trade distortions from third countries. My colleague Cecilia Malmström is leading our efforts to fully use the trade defence toolbox, including through imposing anti-dumping and anti-subsidy duties.”

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