AkzoNobel appeal on Metlac merger rejection dismissed by appeals tribunal

By Joseph James Whitworth contact

- Last updated on GMT

Related tags: United kingdom, Law

UK appeals tribunal dismisses AkzoNobel's appeal in Metlac takeover
UK appeals tribunal dismisses AkzoNobel's appeal in Metlac takeover
AkzoNobel’s appeal against the decision to block its takeover of Metlac Holding has been rejected by the UK Competition Appeal Tribunal.

The Competition Commission ruled that the deal would lead to a substantial lessening of competition (SLC) in the market for the supply of metal packaging coatings for beer and beverage cans in the UK, in its December verdict​.

They said the only effective remedy for the SLC would be the prohibition of the transaction.

AkzoNobel appealed the decision but the tribunal dismissed all three of their grounds of review last week.

The firm refused to comment on the ruling when contacted by FoodProductionDaily.com.

AkzoNobel’s appeal

In its appeal, AkzoNobel said that the commission erred in concluding that the firm, registered in the Netherlands, carries on business in the UK and could be the subject of a prohibition order.

However, the tribunal concluded that the commission had not erred in law and/or misdirected itself as to its power to prohibit the transaction.

“The Tribunal was satisfied, having regard to the functional and operational structure of the Akzo Nobel Group, as found by the Commission, that Akzo Nobel was “a person carrying on business in the United Kingdom” for the purpose of the Act​,” said a statement from the tribunal.

Competitors pricing

Another argument was the conclusion that Metlac competes more aggressively on price than other competitors (PPG Industries and The Valspar Corporation) which led to the finding for the commission’s theory of harm and SLC.

For this point, the tribunal found that the commission had not erred in finding that Metlac competes more aggressively on price than its competitors.

The commission drew on three sources of evidence in its analysis (a) a subset of the responses provided to the German Bundeskartellamt’s survey of customer views and pricing in the coatings market as part of that authority’s investigation of the transaction under German law; (b) responses to the commission’s survey of customer views; and (c) the commission’s own pricing data.

“The tribunal found that the commission’s analysis of, the reliance placed upon, and the conclusions drawn from, each of the three sources were rational and that it had properly investigated the reasons why Metlac is able to offer lower prices than PPG and Valspar.”

The final area of note from AkzoNobel said that there was no evidence to support the conclusion that the transaction would lead to a loss of competition in innovation.

However, the tribunal said that it held that the commission had a sufficient evidential basis upon which to conclude that the transaction might lead to a loss of competition in innovation.

Attempt to buy Metlac

AkzoNobel exercised a pre-existing contract clause to buy the remaining stake in Metlac in January 2012 and assume sole control of the company.

The firm has an existing stake of 49% in Metlac Holding through its subsidiary Akzo Nobel Coatings International B.V. (ANCI) as well as owning 44% of a Metlac subsidiary.

AkzoNobel and Metlac are two of the four main suppliers of metal packaging coatings for segments including food and beverage cans in the European Economic Area (EEA).

An investigation found between them, the firms supply 40% to 55% of metal packaging coatings for beer and beverage metal packaging in the EEA and 35% to 50% of metal packaging coatings for food, caps and closures and general line metal packaging in the EEA.

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