CMA publishes issues statement over Sonoco, Weidenhammer merger
Its panel members will decide whether a relevant merger situation has been created and, if so, whether the acquisition has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the UK for goods or services. The inquiry group must report by 13 July 2015.
Composite cans
Sonoco and Weidenhammer manufacture and supply packaging products, mainly composite cans (rigid tubes with closures on each end).
The issues statement identifies the key questions which the inquiry is examining. It does not imply the inquiry group has yet identified any competition concerns.
In a statement the CMA said: “On January 27, 2015, the CMA, in exercise of its duty under section 22(1) of the Enterprise Act 2002 (the Act), referred the completed acquisition by Sonoco Products Company (Sonoco) of Weidenhammer Packaging Group (Weidenhammer) for further investigation and report by a group of CMA panel members (the inquiry group).
“In this investigation, we understand a composite can to be a rigid tube with closures on each end in which he tube is made of paper and any other materials required to give the product the physical properties required, for example tamper-proof protection and an aluminium moisture barrier for the storage of food products.”
The CMA must now decide whether a relevant merger situation has been created; and if so, whether the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition (SLC) within any market or markets in the UK for goods or services.
What would have happened if the merger had not taken place
It will investigate the extent to which different forms of packaging and customer types can be aggregated on the basis of demand-side substitution, or supply-side substitution, or both.
It will also consider what would have been likely to have happened if the merger had not taken place, and whether Weidenhammer would have exited the relevant market(s) in the absence of the acquisition and, if so, whether there would have been an alternative purchaser to Sonoco of the company or its assets.
“A particular concern, which has not yet been fully investigated at this stage, is that some customers, for a variety of reasons including competitors’ lack of capacity, appear to lack credible alternative suppliers to the merging parties,” the CMA claimed.
“We will investigate whether the parties are close competitors and whether the competitive constraints from existing competitors or other relevant countervailing factors are likely to prevent or mitigate any SLC that we may find.
“In particular, we will need to investigate the extent to which customers are able to switch away from the merging parties to outside options, including other suppliers of composite cans for food products; composite cans for non-food products; and alternative food packaging products (including glass, tin, plastic or other containers.”
Any party wishing to respond to the issues statement can do so in writing, by no later than 5pm on March 11, 2015 by emailing sonoco.weidenhammer@cma.gsi.gov.uk
