From the FT on Friday:
Executives at Glencore, the world’s largest commodities trader, and Xstrata, the mining group, had been confident that their deal would not require a formal investigation by the European Commission.
But, after talks with officials at Europe’s top competition regulator, the groups accepted on Friday that they would have to file their case in the coming weeks, triggering a process that could take several months.
How come? How could executives at these two global metals houses (and their advisers) possibly have thought that in combining their businesses as a single $90bn entity, they might avoid formal investigation by the European Commission?
Here’s the basic EC handbook:
And here’s the trigger par…
A concentration has a Community dimension, if
· the combined aggregate worldwide turnover (from ordinary activities and after turnover taxes) of all the undertakings concerned (in the case of the acquisition of parts of undertakings, only the turnover relating to the parts which are the subject of the concentration shall be taken into account with regard to the seller(s)) is more than EUR 5 000 million (special rules apply to banks), and
· the aggregate Community-wide turnover of each of at least two of the undertakings concerned is more than EUR 250 million, unless
· each of the undertakings concerned achieves more than two-thirds of its aggregate Community-wide turnover within one and the same Member State.
That last point concerns whether the competition review is held at a national or Brussels level within the EU. But there is not and never has been any doubt as to whether a deal of this size would merit close regulatory scrutiny.
And the same will apply in the US, in Australia, in China, in …
Related links:
‘orrible merger! Read all about it! — FT Alphaville