Mergers: Commission clears Hydro’s acquisition of Alumetal

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

The European Commission has approved unconditionally, under the EU Merger Regulation, the proposed acquisition of Alumetal by Norsk Hydro. The Commission concluded that the merger would not raise competition concerns in the European Economic Area (‘EEA’), notably for green aluminium foundry alloys.

Today’s decision follows an in-depth investigation of the proposed acquisition of Alumetal by Norsk Hydro. Both companies are major European producers of aluminium foundry alloys, a semi-finished aluminium product used mainly by the automotive industry to cast auto parts. Alumetal makes these from recycled material, while Norsk Hydro uses non-recycled material and relies on renewable energy for its production. Alumetal also produces aluminium master alloys used to produce casthouse products such as aluminium foundry alloys.

The Commission’s investigation

In the context of its in-depth investigation, the Commission assessed whether the transaction might: (i) reinforce Norsk Hydro’s leading position as a supplier of aluminium foundry alloys; (ii) eliminate important competition from a growing supplier able to bring cheaper and advanced recycled aluminium products to the market and in particular to automotive customers; and (iii) result in few or no credible alternative master alloy suppliers, following the combination of Alumetal’s production of master alloys upstream and Hydro’s production of casthouse products downstream.

During its in-depth investigation, the Commission gathered extensive information and received feedback from a large number of companies active in the sale or purchase of aluminium foundry alloys and aluminium master alloys. The Commission found that:

• The parties’ combined market shares in the EEA market for solid advanced aluminium foundry alloys are moderate and there are a number of sizeable alternative suppliers, including green players. Moreover, the parties are not close competitors in the market for solid advanced aluminium foundry alloys.
• The vertical relationships between Alumetal as a producer of aluminium master alloys and Hydro as a potential customer would not raise concerns because of the presence of sufficient alternative suppliers and customers of this product on the market.  

The Commission therefore concluded that the transaction would raise no competition concerns in the EEA or any substantial part of it and cleared the case unconditionally.

Companies and products

Norsk Hydro is a Norwegian aluminium company with activities throughout the aluminium value chain, ranging from bauxite and alumina production to energy generation and aluminium recycling.

Alumetal is a Polish producer of aluminium foundry alloys and aluminium master alloys with plants located in Poland and Hungary.

Merger control rules and procedures

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

There are currently 8 on-going phase II merger investigations: (i) the proposed creation of a joint venture by Orange and MasMovil; (ii) the proposed acquisition of Asiana by Korean Air; (iii) the proposed acquisition of OMV Slovenija by MOL; (iv) the  proposed acquisition of Inmarsat by Viasat; (v) the proposed acquisition of VMware by Broadcom; (vi) the proposed acquisition of Lagardère by Vivendi; (vii) the proposed acquisition of Activision Blizzard by Microsoft; and (viii) the proposed acquisition of eTraveli by Booking .

More information will be available on the competition website, in the Commission’s public case register under the case number M.10658.