Mergers: Commission opens in-depth investigation into proposed acquisition of Metallo by Aurubis

metals

(Christopher Burns, Unsplash)

This article is brought to you in association with the European Commission.


The European Commission has opened an in-depth investigation to assess the proposed acquisition of Metallo by Aurubis, under the EU Merger Regulation. The Commission is concerned that the acquisition may reduce competition in the purchasing of copper scrap for refining.

Commissioner Margrethe Vestager, responsible for competition policy, said: ”Demand for copper is likely to increase, notably also due to the growing importance of electric cars. A well-functioning, competitive copper recycling industry is key to meet the future needs of European industry and to limit the impact on the environment. The Commission will carefully assess the merger between Aurubis and Metallo, the two leading copper scrap refiners in Europe, to ensure the transaction would not negatively affect competition in this important sector.”

Aurubis is a vertically integrated provider of non-ferrous metals and the leading player in the copper industry in Europe. Metallo is a comparatively smaller but innovative company processing and refining non-ferrous metal scrap, in particular copper scrap. Both companies purchase large quantities of copper scrap for refining.

Copper is 100% recyclable and copper scrap is becoming an increasingly important input for the production of copper products, such as copper cathodes, wire rods and shapes. A significant share of copper scrap is generated directly or indirectly by manufacturing activities.

The Commission’s preliminary competition concerns

The merger would bring together the two largest purchasers and refiners of copper scarp in Europe, leading to very large combined market shares in the purchasing and refining of copper scrap.

The preliminary investigation suggests that the two companies are each other’s closest competitors, in particular for the purchasing and refining of complex and tin-bearing copper scrap. For companies who supply these materials, Aurubis and Metallo could currently be the only two viable purchasers.

The initial investigation also suggests that exporting certain types of copper scrap might not be a viable alternative, as there appear to be regulatory limits to exporting certain types of waste and as the costs of long freight as well as other factors may make export unprofitable.

Therefore, at this stage, the Commission is concerned that, following the transaction, the merged entity could hold a dominant position in the procurement of copper scrap for refining, giving it increased buyer power to negotiate lower prices for the copper scarp it purchases. By preventing competition on price, the merger could thus disrupt the normal functioning of the copper recycling industry, lowering the incentives for recyclers to collect and sort copper scrap.

The Commission will also further investigate the following issues:

  • Lower prices for copper scrap could translate into higher costs for industrial manufacturers which generate copper scrap as a by-product of their industrial production. These manufacturers may pass on their overall increased costs to their customers, which in turn may lead to higher prices for manufactured products.
  • Aurubis is the largest producer in the European Economic Area (EEA) in the downstream markets for copper cathodes and wire rods. With the acquisition of Metallo, Aurubis could gain control over the supply of important inputs for these products. The Commission will further investigate whether the merger will increase Aurubis’ incentives and ability to restrict the ability of its actual or potential rivals to compete effectively.

The Commission will now carry out an in-depth investigation into the effects of the proposed transaction to determine whether it is likely to significantly reduce effective competition.

The transaction was initially notified to the Commission on 30 August 2019 and subsequently withdrawn. The transaction was notified to the Commission again on 14 October 2019. Aurubis and Metallo have decided not to submit commitments during the initial investigation to address the Commission’s preliminary concerns. The Commission now has 90 working days, until 3 April 2020, to take a decision. The opening of an in-depth investigation does not prejudge the outcome of the investigation.

Companies and products

Aurubis, based in Germany, is a worldwide provider of non-ferrous metals and the largest integrated European copper producer. Aurubis processes copper concentrates and copper scrap and produces copper cathodes and by-products of the copper refining process. The company also supplies copper shapes and semi-finished copper as well as copper alloy products such as flat rolled, bars, rods and wires.

Metallo, based in Belgium, is active in the recycling, processing and trading of non-ferrous metals. In particular, Metallo refines copper scrap to produce copper anodes, copper cathodes, tin, lead and other by-products of the refining process.

Merger control and procedure

The Commission has the duty to assess mergers and acquisitions that have been referred to it by EU Member States 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).

In addition to the current transaction, there are three ongoing Phase II merger investigations: the proposed acquisition of Chantiers de l’Atlantique by Fincantieri, the proposed creation of two joint ventures by Boeing and Embraer and the proposed acquisition of Lotos by PKN Orlen.

More information will be available on the Commission’s competition website, in the Commission’s public case register under the case number M.9409.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

UN launches drive to highlight environmental cost of staying fashionable

Three ways batteries could power change in the world

Crucial medical supplies airlifted to north-east Syria to meet ‘desperate need’

‘Regional security and integration’ in Central Africa under threat, Security Council warned

Philanthropy is at a turning point. Here are 6 ways it could go

JADE Spring Meeting 2017 – day 3: JADE Academy trainings, networking session and gala dinner – Excellence Awards winners revealed

Nature is our strongest ally in ensuring global water security

Companies have a new skill to master – innovation

Digital: The EU must set the standards for regulating online platforms, say MEPs

Why cybersecurity matters more than ever during the coronavirus pandemic

Wednesday’s Daily Brief: Syrian detainees, Zimbabwe hunger crisis, Kabul attack, Mexico disappearances, new tech to feed the world

5 ways blockchain can transform the world of impact investing

A Valentine’s Special: we can never overdose on love

Australia’s record heatwave: From fainting tennis players to dead fish

China is sending science students to live with rural farmers – and crop yields are skyrocketing

UN chief appoints Luis Alfonso de Alba as Special Envoy for the 2019 Climate Summit

Long-term EU budget: Parliament wants safety net for beneficiaries

Yemen hospital airstrike under investigation amid resurgence of deadly cholera

UN chief welcomes G20 commitment to fight climate change

Statement by OECD Secretary-General Angel Gurría on the outcome of COP 25

Growing up near green space is good for your mental health as an adult

Focus on EU’s external action and building our stronger inner core: von der Leyen at the Special European Council

What you need to know about the Sustainable Development Impact Summit

MWC 2016 LIVE: Under Armour learns from “robust community of data”

UN film festival encourages young people to promote peace, dialogue and empathy

How to rebuild trust and integrity in South Africa

EU Council approves visa-free travel for Ukraine and cement ties with Kiev

EU prepares a banking union amidst financial ruins

EU to host international donors’ conference for Albania to help with reconstruction after earthquake

UN chief urges top digital tech panel to come up with ‘bold, innovative ideas’ for an ‘inclusive’ future

Employment and Social Developments in Europe: 2018 review confirms positive trends but highlights challenges, in particular linked to automation and digitalisation

Parliament’s proposal to reinforce flagship programmes is worth 39 billion euros

‘No-deal’ Brexit preparedness: European Commission takes stock of preparations and provides practical guidance to ensure coordinated EU approach

China’s lead in the global solar race – at a glance

Want a fairer society? This economist says he has the answer

UN rights chief calls for release of hundreds abducted and abused in South Sudan

More than 90 per cent of Africa migrants would make perilous Europe journey again, despite the risks

Rule of law: First Annual Report on the Rule of Law situation across the European Union

One million facing food shortages, nutrition crisis after Mozambique cyclones: UNICEF

Civil society organisations disenchanted with “Youth Guarantee”

How has policy affected employment in small businesses in the US?

Financial services are changing. Here’s how

Why your next work meeting should be a ‘walk-and-talk’

World Youth Skills Day: What you need to know for 2020

Why are the Balkans’ political leaders meeting in Geneva this week?

The children’s continent: keeping up with Africa’s growth

Guterres underscores UN role in achieving a free, secure Internet

Office workers in these economies clock up the most extra hours

COP24: Huge untapped potential in greener construction, says UN environment agency

Three steps we must take to secure the future of our forests

European Agenda on Migration: Still fragile situation gives no cause for complacency

WHO working to save lives following powerful earthquake in Albania

The EU can afford to invest trillions in support of employment

How to create responsible supply chains in the age of globalization 4.0

Great Reset: What university entrepreneurship can bring to the post-COVID world

Civil protection: Parliament strengthens EU disaster response capability

Traditional finance is failing millennials. Here’s how investing needs to change

New Mozambique storm rips off roofs, brings lashing rain as aid response kicks in

My disability, my identity

Brussels Vs. Google: The €1 bn EU fine and the US response

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s