The European Commission has cleared under the EU Merger Regulation the proposed acquisition of a controlling stake in Compañía Española de Petróleos S.A (“CEPSA”), a Spanish integrated oil and energy company, by International Petroleum Investment Company (“IPIC”) of Abu Dhabi. After examining the operation, the Commission concluded that the merged entity would face effective competitors and that the transaction would have no effect on the merged entities’ incentives to coordinate their behaviour.
The Commission’s examination showed that the proposed transaction gives rise to horizontal overlaps in the markets for phenol and acetone. Phenol is used for producing (a) bisphenol-A (“BPA”), which in turn is used to produce polycarbonate used for different applications in optical media, electrical and electronics and in construction; (b) phenolic resin, which can be used, among other things, as a wood-binding adhesive in the construction sector, as a bonding agent for foundry, and as sand moulds in the industrial sector; (c) caprolactam, which is used to make 6-nylon fibres, engineering resins and film; and (d) slimicide, a disinfectant and an anaesthetic. Acetone is used in the production of (a) polycarbonate from bisphenol-A (“BPA”) (to produce bisphenol-A, one needs both phenol and acetone); (b) methyl methacrylate (“MMA”); and (c) solvents.
The Commission’s investigation revealed that IPIC’s and CEPSA’s combined market shares are moderate and that a number of credible competitors will remain active in the markets for phenol and acetone.
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