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The Competition and Markets Authority (CMA) is to investigate the proposed acquisition of W Corbett Galvanizing Ltd by Joseph Ash Ltd.
The two firms offer steel galvanising services to customers within the Midlands area of Great Britain. Galvanising is a process used to protect steel from corrosion and is an important input for a number of products, including products used in infrastructure projects.
The CMA has found that the proposed acquisition may be "expected to result in a substantial lessening of competition in the supply of galvanising services in the West Midlands region around the Corbett galvanising plant in Telford", which represents an important regional market for these services.
During its investigation, the received a number of concerns from customers that the proposed acquisition would lessen competition and lead to higher prices.
Other evidence gathered by the indicated that the companies compete closely and are two of the 3 main galvanisers in the area served by. The found that the competition provided by other galvanisers in the area may not be sufficient to take away the competition concerns arising from the merger.
Andrea Coscelli, Executive Director of Markets and Mergers and decision-maker in this case, said: "A number of important manufacturers in the United Kingdom rely on competitively priced inputs such as this for the production of their goods. When competition is reduced and results in higher prices, the ability of these manufacturers to compete nationally and internationally can suffer – and can in turn lead to increased prices for their own customers.
"We are concerned to preserve the existing level of competition in the West Midlands region where Joseph Ash and W Corbett currently compete. W Corbett is a large independent player and has provided a strong competitive constraint to its established rivals for many years.
"Unless Joseph Ash offers undertakings that resolve the competition concerns, this transaction will face an in-depth investigation to assess whether this merger might result in higher prices for manufacturers using these services."
(MH)
