Bundeskartellamt prohibits Sulzer/Kelmix merger

The Bundeskartellamt has prohibited the merger of Sulzer AG, Switzerland, Kelmix Holding AG, Switzerland, and Werfo AG, Liechtenstein, and ordered the dissolution of the merger. The dissolution can either take place by reversing the acquisition or by selling the acquired companies to a third party. Although merger control proceedings were still in progress Sulzer already put the merger into effect in late 2006 in view of the so-called “minor market clause” which exempts certain cases from the obligation to notify. In the case at hand the Bundeskartellamt does not consider the minor market clause to be applicable, irrespective of its legal interpretation which remains to be clarified by the Federal Supreme Court , so that the merger was subject to notification.

Sulzer and Kelmix produce inter alia so-called “two-component cartridges” which are used for the filling of e.g. silicon adhesives in the industrial and construction sector or in impression materials used in dental treatment. The Bundeskartellamt has prohibited the merger as Kelmix, through its subsidiary Mixpac, was already dominant in the Europe-wide market for two-component cartridges and accessories for medical and dental applications. The acquisition by Sulzer has strengthened this market position even further. The merger would also have created a dominant position in the Europe-wide market for two-component cartridges for industrial and construction applications. The country by far the most affected by the merger is Germany, as about 50 per cent of the Europe-wide turnover in these markets is achieved here.

In Germany companies whose combined aggregate turnover exceeds 500 million € are required by law to notify a planned merger to the Bundeskartellamt before it is put into effect (preventive merger control). The President of the Bundeskartellamt, Dr Böge, stated: “The notification of concentrations before they are put into effect is one of the most important competition rules. This provision ensures that as many competitive structures as possible remain in the market to control the behaviour of companies through effective competition and to make supervision by the state or intervention by authorities superfluous.” If the completion of a merger creates or strengthens a dominant position, competition law requires the dissolution of the concentration, and fines can be imposed against the companies and persons responsible. Mr Böge: “Divestiture places considerable burdens on the companies concerned, their staff and the Bundeskartellamt. Nevertheless our authority will not hesitate to dissolve mergers which, as in the case at hand, were completed unlawfully.”

The prohibition and the dissolution order can be appealed to the Higher Regional Court. The dissolution order is immediately enforceable.

The decision will shortly be available on the Bundeskartellamt’s website at www.bundeskartellamt.de (in German).