European Commission conditionally approves acquisition of Saudi Arabia’s Cristal by Tronox

European Commission conditionally approves acquisition of Saudi Arabia’s Cristal by Tronox
Commissioner Margrethe Vestager, in charge of competition policy in European Commission.
Published: 8 July 2018 - 10 p.m.
By: Martin Menachery

The European Commission has approved under the EU Merger Regulation the acquisition of Cristal by Tronox, both major suppliers of titanium dioxide pigment.

The approval is conditional on full compliance with commitments offered by Tronox.

Commissioner Margrethe Vestager, in charge of competition policy, said: "Titanium dioxide pigment is an essential ingredient in many consumer products, including paper laminate used in furniture and interiors. Tronox and Cristal are two of the four major players in this market but we can approve their merger because the companies offered a suitable remedy that fully addresses our competition concerns. This decision will ensure that these products can continue to be offered at competitive prices and without reducing the number of suppliers available for consumers."

Tronox and Cristal are both active in the production of titanium dioxide pigment. They also own titanium feedstock mines, which provide the input material for pigment production, and sell zircon as a by-product of the mining. Titanium dioxide pigment, which is manufactured through either a chloride, or a sulphate based production process, is used to whiten and opacify a wide range of consumer products, including paints, plastics and paper. Zircon is used in the production of tiles, ceramics and fire bricks.

The Commission carried out an in-depth review of the proposed acquisition and found that the takeover, as initially notified, would have significantly reduced competition on the European market for chloride-based titanium dioxide pigment for use in paper laminate.

Tronox and Cristal are currently two of only four major suppliers of this product, the others being Chemours and Kronos. The acquisition would therefore have led to a reduction in choice and, potentially, to price increases.

To address the Commission's competition concerns, Tronox offered to sell its global business in titanium dioxide pigment for paper laminate comprising the required technology and other intangibles to an experienced manufacturer with chloride-based production technology active in the European Economic Area (EEA).

The acquisition of Cristal is subject to the Commission approving the buyer that Tronox will propose. In its assessment the Commission will consider the proposed buyer's suitability and incentive to compete in a way that would replicate the current competitive dynamic on the market where the Commission found competition concerns.

These commitments fully address the Commission's concerns as they ensure that the same number of suppliers will remain active on the market of chloride-based titanium dioxide pigment for paper laminate, and that customers continue to enjoy the same level of choice.

The Commission therefore considered that the proposed transaction, as modified by the commitments, would no longer raise competition concerns. The Commission's decision is conditional upon full compliance with the commitments.

The Commission has cooperated closely with other competition authorities, including the US Federal Trade Commission, the Australian Competition and Consumer Commission, and the Chinese Competition Authority.

Cristal is a privately held global chemical and mining company headquartered in Jeddah, Saudi Arabia.

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