Commission prohibits takeover of Cemex Croatia by HeidelbergCement and Schwenk Zement
- 07/04/2017
- Articles
On 5 April 2017, the European Commission prohibited HeidelbergCement and Schwenk Zement’s acquisition of Cemex Croatia though their joint venture Duna Dráva Cement.
The transaction was supposed to combine the two largest cement importers in Croatia with Croatia’s largest cement producer. Announcing the prohibition, EU Competition Commissioner Vestager stated that the deal would have led to higher cement prices in Croatia.
During the review, the parties proposed a remedy that involved granting competitors access to a cement terminal in southern Croatia. However, according to the Commission, the parties did not offer to divest a stand-alone business. Rather, by merely providing access to a cement terminal without also offering access to an established cement source, existing customers, brands, or sales staff, the Commission found that the parties would not enable a competitor to establish a viable competing cement business in southern Croatia.
This is the second time the Commission has prohibited a transaction in 2017, which follows shortly after the prohibition decision in LSE/Deutsche Börse (see VBB on Competition Law, Volume 2017, No. 3). This decision is noteworthy because it demonstrates the Commission’s strong preference for structural commitments (e.g., the sale of a standalone business unit) which do not require monitoring measures. Also, during the merger review, the parties filed an action before the General Court in December 2016 challenging the Commission’s decision to launch an in-depth investigation into the transaction. The parties argued that the Commission lacked jurisdictional competence to review the deal as it incorrectly identified HeidelbergCement and SchwenkZement as the “undertakings concerned”, rather than Duna-Dráva Cement, an entity which the parties regard as a full-function joint venture (see VBB on Competition Law, Volume 2017, No. 1). This action is still pending.