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European Commission (EC) authorities have blocked the creation of a joint venture by Tata Steel and ThyssenKrupp through the EU Merger Regulation.

The tie-up would have reduced competition and increased prices for different types of steel claims the EC, adding the parties did not offer adequate remedies to address the concerns.

“Steel is a crucial input for many things we use in our everyday life, such as canned food and cars,” said Competition Policy Commissioner, Margrethe Vestager.

“Millions of people in Europe work in these sectors and companies depend on competitive steel prices to sell on a global level. Without remedies addressing our serious competition concerns, the merger between Tata Steel and ThyssenKrupp would have resulted in higher prices.

“So we prohibited the merger to avoid serious harm to European industrial customers and consumers”.

The decision follows an in-depth investigation by the Commission of the proposed joint venture, which would have combined the flat carbon steel and electrical steel activities of ThyssenKrupp and Tata Steel in the European Economic Area (EEA). 

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By GlobalData

ThyssenKrupp is the second largest producer of flat carbon steel in the EEA, while Tata Steel is the third largest. Both companies are significant producers of metallic coated and laminated steel for packaging applications and of galvanised flat carbon steel for the automotive industry.

The European steel sector is a key industry across the EEA – it employs around 360,000 people in more than 500 production sites in 23 EU Member States.

“Today’s decision preserves effective competition on European steel markets and the competitiveness of this industry,” added a Commission statement. “It will also ensure key customer industries such as the European automotive industry and the packaging industry continue to enjoy access to key inputs at competitive conditions.

“As a result, consumers in Europe can continue to rely on the affordability of canned food products and the European automotive industry is able to source steel competitively from the EEA and that product innovation in steel is preserved in support of the transition to more climate friendly and environmentally sustainable mobility.”

During the investigation, the Commission received feedback from a large number of customers active in the packaging and automotive industries.

These companies depend on competitive steel prices to offer their products to customers at competitive prices and many were worried, maintains the EC, the transaction would result in higher prices.