Competition Commission concerns over china clay merger
CC says Imerys and Goonvean merger could lead to loss of competition and higher prices for some customers
THE Competition Commission (CC) has provisionally ruled that last year’s merger between kaolin suppliers Imerys Minerals Ltd and Goonvean Ltd could lead to a loss of competition and higher prices for some of their customers.
In a summary of its provisional findings report, published last week, the CC has provisionally found that the merger would effectively leave the merged company as the only UK kaolin supplier to tableware manufacturers and that there would be similar loss of competition in the market for the supply of kaolin for certain performance-mineral applications (paints, adhesives etc).
The CC has not found a substantial lessening of competition in the other product markets, such as kaolin for paper products, sanitaryware or by-products from the extraction process.
The CC has also published a notice of possible remedies, which sets out options for addressing the loss of competition – including whether a partial sell-off of the Goonvean business or behavioural measures to protect customers from price rises or product withdrawal could be alternatives to a full reversal of the acquisition.
Simon Polito, CC deputy chairman and chairman of the Imerys/Goonvean Inquiry Group, said: ‘Kaolin is used in a wide range of end-products and is processed specifically to meet these particular requirements. As a result of our assessment, we have provisionally found that UK customers have few alternative options, and in two of these markets, tableware and performance minerals, the parties are effectively the only UK suppliers.
‘We want to look at ways we can stop those customers facing resulting higher prices and possible disruption to the supply of kaolin products. We are conscious that we have only provisionally found a problem across some of the products supplied by the merged businesses, so we do want to look closely at alternatives to a full sell-off of Goonvean but which will still protect the interests of these customers.’
Imerys Minerals Ltd acquired Goonvean Ltd’s china clay operations in November 2012 and merged their six sites into Imerys’ existing structure. The Office of Fair Trading referred the completed merger to the CC in April 2013 after an investigation indicated competition concerns. The CC is expected to publish its final report by 17 September 2013.
