The European Commission has given clearance under merger regulations to the proposed acquisition of French aluminium producer Pechiney by Alcan of Canada.
The Commission's review highlighted concerns in a number of markets, but Alcan was able to divest a number of businesses. According to the Commission, the divestments and other conditions ensured a comparative level of competition in the supply of aluminium sheets for the beverages and cosmetics industries after the merger.
Canada's Alcan and Pechiney of France are aluminium companies. Their activities include bauxite mining, alumina refining and power generation as well as aluminium smelting, manufacturing and recycling. Both have research and development departments and also make fabricated products, most importantly packaging, including aerosol cans, cartridges and flexible packaging - all of which are widely used in the food and beverage industry.
If successful, the bid would create the number one aluminium company in terms of global turnover, followed closely by current world leader Alcoa.
The Commission's market investigation identified concerns in the overall market for flat-rolled aluminium products (FRPs) and particularly with regard to beverage and food can stock as well as beverage can end stock (can tops). These markets are already concentrated and the combination of Alcan and Pechiney would result in what the Commission terms high to very high market shares".
The Commission's investigation also highlighted concerns in the markets for aluminium aerosol cans and aluminium cartridges that require rigid packaging.
In order to meet the Commission's regulatory concerns, Alcan divested a number of its businesses primarily concerned in the food packaging business as well as eliminating overlap in its activities in the aerosol and cartridge packaging segments.
In 1999 Alcan and Pechiney notified a friendly merger for regulatory clearance. The deal triggered many competition concerns and was the subject of an in-depth investigation. The plan was abandoned in March 2000 after the companies disagreed on the undertakings to submit to the Commission.