REG - Competition and Mkts - CMA accepts fast-track remedy in chemicals deal

Sika AGAnnouncement

15/12/2022 08:15

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RNS Number : 8170J  Competition and Markets Authority  15 December 2022

CMA accepts fast-track remedy in chemicals deal

·    The remedy will maintain service quality for the construction
industry and prevent higher prices

The CMA has accepted a remedy from Sika and MBCC preventing their global
merger from harming the UK construction industry.

Early in the Phase 2 investigation, the 2 businesses accepted that Sika's
anticipated purchase of MBCC raised competition concerns in the supply of
chemical admixtures in the UK. The parties asked the Competition and Markets
Authority (CMA) to "fast-track" the case to the assessment of a remedy that
could address those concerns, meaning that the case could be resolved more
quickly. As a result, the CMA has today published its final decision, with a
detailed assessment of a complex remedy, well ahead of the deadline of 24
January 2023.

The merging businesses proposed to sell MBCC's chemical admixtures business in
the UK, across Europe and several other countries, including its central
research and development assets. The CMA assessed whether the parties'
proposed remedy would fully restore the competition that would be lost as a
result of the merger. Following a detailed review of the remedy, and
consultation with stakeholders and various modifications proposed by Sika and
MBCC, the CMA has accepted that the proposed sale would resolve the
competition concerns it identified, bringing the case to a close.

The CMA has engaged closely and constructively with other agencies reviewing
this transaction throughout its investigation, including regarding the
effectiveness of the proposed remedy.

Richard Feasey, Independent CMA Panel Chair, said:

"After Sika and MBCC accepted early on that the deal would have caused
competition concerns in the UK construction industry, we were able to focus
our inquiry on their proposals to address our concerns. The proposals agreed
today will maintain the level of innovation, services and quality in chemical
admixtures available to concrete producers and help prevent this deal raising
prices for the construction industry in the UK.

"We are pleased that by working collaboratively with the companies and other
competition authorities, we have been able to reach this decision on a complex
global remedy so quickly. The CMA will keep looking for ways to make merger
control focused, fast and efficient."

In November 2021, Swiss firm Sika agreed to buy the German based MBCC Group in
a £4.5 billion deal. Sika and MBCC are the 2 largest UK suppliers of chemical
admixtures, which are an essential input for products like concrete and cement
used in the construction industry and control various characteristics of
concrete, such as its strength or setting time.

The companies are widely regarded as the strongest suppliers in the UK market,
particularly in relation to their product development and innovation
capabilities, and together account for over half of the UK supply.

Following an initial Phase 1 investigation, the CMA identified competition
concerns in the supply of chemical admixtures in the UK. As a result, the CMA
referred the deal for an in-depth Phase 2 investigation in August 2022.

For more information, visit the Sika AG / MBCC Group merger inquiry page
(https://www.gov.uk/cma-cases/sika-ag-slash-mbcc-group-merger-inquiry) .

Notes to editors

1.   The parties propose to sell MBCC's Admixtures Systems division
including MBCC's chemical admixture businesses in the UK, the EEA,
Switzerland, the United States, Canada, and the whole of MBCC's businesses in
Australia and New Zealand to a single purchaser. The CMA will need to approve
the purchaser before the sale is finalised.

2.   The process that applies where merging parties request to concede an
SLC is set out in paragraphs 7.18 to 7.21 of CMA2 revised
(https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1044636/CMA2_guidance.pdf)
.

3.   In addition to conceding that the deal raises competition concerns in
relation to the SLC identified at Phase 1, the firms agreed to waive their
right to challenge this position during the CMA's Phase 2 investigation and
submitted a proposed remedy to address the concerns identified.

4.   The CMA also accepted a fast-track remedy during a Phase 2
investigation in relation to the merger between Carpenter and Recticel
(https://www.gov.uk/government/news/cma-accepts-remedy-to-address-concerns-in-foam-merger)
.

5.   For media enquiries, contact the CMA press office on 020 3738 6460 or
press@cma.gov.uk (mailto:press@cma.gov.uk) .

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