An in-depth investigation to assess the proposed creation of a joint venture by Tata Steel and ThyssenKrupp, has been opened by the European Commission (EC) under the EU Merger Regulation.

At this stage, the Commission is concerned the merger may reduce competition in the supply of various high-end steels.

“Steel is a crucial input for many of the goods we use in our everyday life and competitive steel prices are vital for the European economy,” said Competition Commissioner, Margrethe Vestager.

“Industries dependent on steel employ over 30m people in Europe and we must be able to compete in global markets. This is why we will carefully investigate the impact of the planned combination of Tata Steel’s and ThyssenKrupp’s steel businesses on effective competition in the steel markets.”

Tata Steel and ThyssenKrupp are major integrated producers of flat carbon steel and electrical steel with significant production facilities in the European Economic Area (EEA), in particular in Germany, the Netherlands and the UK.

With the transaction, Tata Steel and ThyssenKrupp would combine their European carbon steel and electrical steel businesses in a joint venture. 

The Commission’s initial market investigation raised several issues relating in particular to combining both companies’ offer of certain speciality flat carbon steel and electrical steel products, namely:

  • Steel for automotive applications, which concerns various types of steel, predominantly galvanised, that are used to produce cars and car parts
  • Metallic coated steel for packaging, which is used to produce various packaging solutions, such as food and aerosol cans; and grain oriented electrical steel, which is used to produce a variety of engineering products such as transformers

At this stage, the Commission is concerned, following the transaction, customers would face a reduced choice in suppliers, as well as higher prices. These customers include various European companies, ranging from major corporations to numerous small and medium-size enterprises (SMEs).

Many compete with imported products in the EEA, or export their products outside Europe and compete globally.

The Commission will now carry out an in-depth investigation into the effects of the transaction to determine whether its preliminary competition concerns are confirmed.

The transaction was notified to the Commission on 25 September this year. Tata Steel and ThyssenKrupp have decided not to submit commitments during the initial investigation to address the Commission’s preliminary concerns.

The Commission now has 90 working days, until 19 March 2019, to take a decision. The opening of an in-depth investigation does not prejudge the outcome of the investigation.