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Friday, 13 December

Wrong Formula - Chemical Firms May Not Mix

The CMA has provisionally found that Ecolab’s proposed merger with Holchem may restrict competition.

The merger of two cleaning chemical firms has raised competition concerns. The CMA has provisionally found that Ecolab’s merger with Holchem may mean businesses face higher prices or a lower quality of service for their cleaning products.

The result of the Competition and Markets Authority’s (CMA) in-depth investigation claims that if Ecolab and Holchem came together, the new organisation is likely to face limited competition from other suppliers. The two are the largest suppliers of cleaning chemicals to food and drink manufacturers in the UK,

The merger would create a new organisation with a market share of 40-50%, much greater than any of the remaining competitors.

 

Foodies

Both companies make and supply cleaning chemicals and technical support services for businesses that manufacture, process and package food, drink and dairy products. Access to competitively priced, safe and effective cleaning chemicals and services is an important part of keeping food and drink safe and free from contamination, according to a CMA report.

The group of independent CMA panel members leading the inquiry has analysed a significant amount of data, including on customers and tenders which showed that they compete closely. The Group also conducted hearings with Ecolab and Holchem and sought views from customers.

Kirstin Baker, the Inquiry Chair said: “We are concerned that as a result of this merger, prices will go up or quality standards in crucial support services will get worse. The Group has therefore provisionally concluded that the merger is likely to lead to a substantial lessening of competition.”

The CMA is now inviting comments on both its provisional findings (by 27 August) and its possible remedies (by 13 August), including unwinding the deal.

Further details can be found on the Ecolab/Holchem case page.

 

Picture: The CMA has provisionally found that Ecolab’s proposed merger with Holchem may restrict competition.

Article written by Brian Shillibeer

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