Mergers: Commission approves DIC’s acquisition of BASF Colors & Effects, subject to conditions

(Credit: Unsplash)

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


The European Commission has approved, under the EU Merger Regulation, the proposed acquisition of BASF Colors & Effects by the DIC Corporation (‘DIC’). The approval is conditional on full compliance with a commitments package offered by DIC.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: ”Pigments are essential inputs for many consumer products that require a colouring process, for example in the automotive and advanced plastics value chains. There are only a few alternative producers for these products and the combination of DIC and BASF Colors & Effects risked depriving customers of high quality pigments. This merger is approved on the condition that the companies divest DIC’s main manufacturing facility for pigments, thereby preserving effective competition in the market.

BASF Colors & Effects and DIC are two market leaders in the production and sale of pigments and other colourants. In particular, they are the two main suppliers of certain categories of pigments worldwide.

Pigments are compounds that colour a material by covering its surface or mixing with it. They are obtained through a variety of chemical processes. Within a given chemical class, there are typically several different pigments, with different chemical compositions, providing different colour shades and technical characteristics. These individual pigments are usually referred to as ‘colour indices’.

The Commission’s investigation

The Commission’s investigation primarily focused on perylene pigments, which constitute a chemical class of red, maroon, violet and black pigments, as well as quinacridone pigments, a chemical class of pigments with tints ranging from yellowish red to violet. Perylene and quinacridone pigments are suitable for the most complex applications, such as automotive coatings, advanced plastics applications, and some industrial applications.

The Commission had concerns that the proposed transaction, as originally notified, would have reduced competition on the market for the supply of perylene and quinacridone pigments.

In particular, the Commission’s market investigation indicated that although several Asian pigments manufacturers have been gradually entering the pigment markets for many chemical classes over the last decades, it is difficult for pigment customers to switch suppliers. This was due to high qualification and reformulation costs that the pigment markets require. In addition, the Commission found that for some perylenes and quinacridone pigments, only a small number of manufacturers are considered to be suitable suppliers for customers requiring high specification pigments.

As a result, the Commission had concerns that following the merger, those customers seeking pigments for the most complex applications would have insufficient alternatives for the supply of some colour indices within perylene and quinacridones pigments.

The acquisition would therefore have likely led to higher prices, reduced choice in products and lower quality of services provided to customers.

The proposed remedies

To address the Commission’s competition concerns, DIC offered to divest its pigment manufacturing facility, operated by its subsidiary Sun Chemical and located in Bushy Park (South Carolina, US). DIC’s Bushy Park facility manufactures the large majority of DIC’s perylene and quinacridone pigments.

The divestment business includes the full transfer of the plant, technology, brands, manufacturing equipment, and other intangible assets and needs to be divested to a manufacturer with proven expertise in pigment production.

The commitments fully address the Commission’s concerns as they remove almost entirely the overlap between DIC’s and BASF Colors & Effects’ activities in the relevant pigments. The commitments ensure that the same number of suppliers will remain active on these markets and that customers continue to enjoy the same level of choice.

The Commission therefore concluded that the proposed transaction, as modified by the commitments, would no longer raise competition concerns. The decision is conditional upon full compliance with the commitments.

Companies and products

DIC Corporation (‘DIC’), headquartered in Japan, is active in the production and sale of printing inks, organic pigments and synthetic resins. As regards pigments and other colourants, DIC is mainly active through its wholly-owned subsidiary Sun Chemical.

BASF Colors & Effects, headquartered in Germany, is a subsidiary of BASF SE and is active in the production and sale of pigments and other colourants.

Merger control rules and procedures

The transaction was notified on 15 May 2020, and the notification was subsequently withdrawn on 23 June 2020. The transaction was notified again on 16 October 2020.

The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) 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).

More information will be available on the competition website, in the Commission’s public case register under the case number M.9677.

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

4 innovative renewable energy projects powering Europe’s green future

How India’s new consumers can contribute to a $6 trillion opportunity

Mediterranean migrant drownings should spur greater action by European countries, urge UN agencies

Bertelsmann Stiftung @ European Business Summit 2014: Transatlantic Free Trade Agreement (TTIP) needs balanced approach

What the G7 wants to do in eastern Ukraine

4 ways the US can take the lead in the fight against human trafficking

A Sting Exclusive: “Cybersecurity: Why consumer products must be looked at urgently”, by BEUC’s Deputy Director General

A small group of world leaders are standing together against inequality

All talk but no action against fraudulent bankers

College meeting: European Commission reorganises the “Task Force for Relations with the United Kingdom” into the “Service for the EU-UK Agreements”.

COP21 Breaking News: Conference of Youth Focuses on Hard Skills to Drive Greater Climate Action

The opportunity of studying Medicine abroad

Address by the President Antonio Tajani at the funeral of Nicole Fontaine

Elections in Britain may reserve a surprise for May’s Tories

State aid: Commission approves €6 billion Italian schemes to support SMEs affected by coronavirus outbreak

Suriname’s climate promise, for a sustainable future

Anti-vaxxers are hurting vaccination campaigns. We need to fight back

Draghi: printing a full extra trillion non negotiable to help all borrow cheaply

These are the world’s 20 most dynamic cities

Mindfulness: a freedom we can still have in the pandemic

Team Europe contributes €500 million to COVAX initiative to provide one billion COVID-19 vaccine doses for low and middle income countries

Why are so few women buying into Bitcoin?

Nagasaki is ‘a global inspiration’ for peace, UN chief says marking 73rd anniversary of atomic bombing

Cape Town’s crisis shows us the real cost of water

Reimagining the future of the tax system

Much more than a ‘lifeline’ for millions of households, remittances can spur global growth, says UN agency

A quarter of Americans have no retirement savings

Tuesday’s Daily Brief: Guterres calls for restraint in Venezuela, Jazz Day, the importance of breastfeeding, and updates from Libya, Iran and Mozambique

1 million citizens try to create a new EU institution

International World Summit Award calls for outstanding digital applications with impact on society from 178 UN member states

Renewable energy could power the world by 2050. Here’s what that future might look like

Health Committee MEPs back plans to boost joint assessment of medicines

Spread of polio still an international public health concern

EU trade agreements: delivering new opportunities in time of global economic uncertainties

Can we prevent a surge in pandemic-related homelessness?

Does upgrading our minds mean losing the spark of genius?

#Travelgoals: why Instagram is key to understanding millennial tourism

The EU-US trade agreement, victim of right-wing extremists and security lunatics

A Sting Exclusive: “There can be no global deal on emissions without China and the USA”, Conservative MEP Ian Duncan stresses from Brussels

Nordic noir: The unhappiness epidemic affecting young people in the world’s happiest countries

The technological revolution has changed the way of saving lives

First aid in six months reaches families in western Yemen, ‘timelines’ slip over Hudaydah ceasefire talks

How the United States is falling in love with secondhand clothes

Disaster Medicine in Medical Education: the investment you just can´t afford to ignore

Budget Committee backs €2.3 million worth of aid to help 550 redundant media workers in Greece

Talent, not technology, is the key to success in a digital future

Africa is set to get its first vertical forest

Will AI make the gender gap in the workplace harder to close?

The digital transformation is a skills and education opportunity for all. Companies must use it

Understanding our own garden that we call mind

OECD welcomes foreign bribery enforcement efforts and urges Colombia to mobilise key government and law enforcement agencies in the fight against foreign bribery


Re-thinking citizenship education: bringing young people back to the ballot box

More than four in 10 women, live in fear of refusing partner’s sexual demands, new UN global study finds

Could implants treat people with brain disease? A young scientist explains

Financial services are changing. Here’s how

The mental health of health professionals: is it worth it?

What meat consumption has brought to the environment and how herbal diets can help human health

South Africa’s economy in 5 charts

Thousands flee fresh violence in South Sudan, many ‘suffering from trauma’

These are the top countries for travel and tourism in 2019

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