UK regulator says no to Konecranes, Cargotec merger
The UK Competition & Market Authority of the United Kingdom (CMA) has provisionally found that the proposed merger of Finnish engineering majors Cargotec and Konecranes raises competition concerns in the supply of container handling equipment.
Following an in-depth investigation, the authority concluded that the merger “would lead to a significant reduction in competition in the supply of a range of container handling equipment products”.
As explained, the evidence gathered by the CMA consistently shows that Cargotec and Konecranes are both major suppliers of container handling equipment, competing closely for business in the UK, and that UK customers would have few remaining alternative suppliers after the merger.
While Cargotec and Konecranes have suggested that there would be an increased competitive threat from Chinese suppliers in future, the independent inquiry group found that this would not be sufficient to prevent the significant loss of competition that the merger of two key established suppliers would bring about.
“Container handling equipment plays a key role in the smooth running of UK ports, moving millions of containers each year to make sure that goods arrive safely on our shelves and British businesses are able to supply their customers overseas,” Martin Coleman, Chair of the CMA inquiry group, said.
“We are currently concerned that this merger could lead to a reduced quality of service or higher prices for port terminals and other customers of container handling equipment. Our competition concerns need to be addressed to ensure that these customers are not worse off as a result of the deal, and there is no negative impact on UK consumers and businesses.”
The CMA plans to issue its final report on the merger by 1 April 2022.
To remind, Cargotec and Konecranes unveiled plans to combine through a merger in autumn 2020. The duo recently unveiled their post-merger operating model. Both companies remain confident that the merger will be completed by the end of H1/2022.
Following the CMA’s provision findings, the duo said in a separate statement:
“Konecranes and Cargotec disagree with the CMA’s provisional conclusions. They will consider the contents of the CMA’s initial findings and continue to engage with the CMA.”
“In addition, Konecranes and Cargotec continue the dialogue and cooperation with other relevant competition authorities, including European Commission and the US Department of Justice, and are considering ways to mitigate some of the concerns raised by the different competition authorities.”
The deal is being reviewed by a number of competition authorities.
In December last year, the two companies won approval from the Finnish Financial Supervisory Authority for their merger prospectus.
In July 2021, the European Union commenced Phase II review of the merger which is expected to be completed during the second half of 2021.
In August 2021, China gave the green light to the duo to proceed with their merger plans.
However, the merger plan faced a hurdle in Australia after the Australian Competition & Consumer Commission (ACCC) outlined preliminary competition concerns in relation to the proposed merger.