EU Commission Approves Acquisition of Ciba by BASF
To resolve competition concerns, BASF proposed to divest DMA3 production assets at Ludwigshafen (Germany), Ciba’s entire EEA synthetic dry strength agent business and Ciba’s global bismuth vanadate business.
13/03/09 The European Commission has cleared under the EU Merger Regulation the proposed acquisition of Ciba of Switzerland by BASF SE of Germany, both active in the chemicals industry. To remedy competition concerns the Commission had in relation to a number of specialty chemical products, used inter alia in the paper, dyestuffs, plastics and skin care sectors, BASF offered undertakings to divest activities in the sectors in question. In the light of these commitments, the Commission concluded that the proposed transaction would not significantly impede effective competition in the EEA or any substantial part of it.
Competition Commissioner Neelie Kroes commented "I am satisfied that the divestments offered by BASF will ensure that its takeover of Ciba will not harm competition in markets for a range of chemicals used in consumer goods such as skin care products, paper and plastics".
BASF, the ultimate parent company of the BASF Group, headquartered in Ludwigshafen, Germany, is the world’s largest chemical company. BASF is active in chemicals, plastics, performance products, agricultural and nutritional products and oil and gas. Ciba, the ultimate parent company of the Ciba (formerly Ciba Specialty Chemicals) Group, is a specialty chemicals company headquartered in Basel, Switzerland.
The Commission's investigation revealed that the proposed transaction would not significantly modify the structure of the majority of the relevant markets, as a number of credible and more significant competitors would continue to exercise a competitive constraint on the merged entity.
However, the Commission found that the proposed transaction would raise competition concerns in a number of relevant specialised markets, namely:
- DMA3 (dimethylaminoethyl acrylate - a chemical intermediate)
- synthetic dry strength agents (used in the paper industry)
- bismuth vanadate (a pigment)
- indanthrone blue (a pigment)
- SA (styrene acrylic – used as a glue for paper applications)
- HALS (hindered amine light stabilisers – used in plastics) and
- UV (ultraviolet light) filters for skin care products.
In the markets where the Commission identified competition concerns one or both parties held significant market shares even before the transaction and the proposed takeover would lead to further strengthening of these positions.
To resolve these competition concerns, BASF proposed to divest DMA3 production assets at Ludwigshafen (Germany), Ciba’s entire EEA synthetic dry strength agent business and Ciba’s global bismuth vanadate business.
Regarding indanthrone blue, BASF agreed to transfer Ciba’s know-how of the finishing line, all supply contracts, customer lists and inventories.
For SA, BASF agreed to divest Ciba’s SA business (and the PVAc – polyvinyl acetate and AA – all acrylate businesses) in the EEA at Kaipiainen (Finland).
For HALS, BASF committed to divest Ciba’s entire Chimassorb 119 FL business, including the Chimassorb 119 FL production assets, relevant know-how and customer lists.
For UV filters, BASF committed to conclude a UV Filter Licence Agreement, giving third party access to the technology behind Tinosorb S (a UV filter patented and currently solely produced by Ciba).
Following a market investigation, the Commission concluded that the divested businesses would be viable and that the commitments would resolve all identified competition concerns.
