WRITTEN QUESTION E-3088/03 by Bruno Gollnisch (NI) to the Commission. Pechiney-Alcan merger.
Date: 2003-10-20
Institutions: European Parliament, Provisional data
Subjects: aluminium, competition law, merger, merger control, transfer of businesses

27.3.2004

EN

Official Journal of the European Union

C 78 E/775

story has demonstrated once again how easily safety issues are outweighed by financial

This
considerations.

Does the Commission intend to take unilateral steps to remind the United States of its responsibilities,
rather than simply allowing the countries concerned to act on their own account?

Answer given by Mrs Wallström on behalf of the Commission

(10 November 2003)

the Commission is currently investigating whether
Following a complaint received on this matter,
Community legislation has been complied with. The Commission has received information that suggests
that the ships may leak oil, PCB and asbestos and that there may be some uncertainty that the recycling
facility in the United Kingdom is ready to receive the ships and recycle them in an environmentally sound
manner.

Further, the commitment made in Johannesburg to protect our vulnerable marine environment and the
experience learned from the ‘Erika’,
‘Prestige’ and ‘Tricolor’ disasters should lead us to a precautionary
approach.

The Commission has therefore expressed its concerns to the administrations of both the United Kingdom
and the United States.

On 20 October 2003, the Member of the Commission responsible for the Environment made a declaration
in the Parliament on this issue.

(2004/C 78 E/0825)

WRITTEN QUESTION E-3088/03

by Bruno Gollnisch (NI) to the Commission

(20 October 2003)

Subject: Pechiney-Alcan merger

Recently, the Commission decided, without further investigation, to authorise the merger of Alcan and
Pechiney, which now form the world’s leading aluminium group, while concentrating their decision-
making structures in North America. Whatever the press may say, this is a hostile takeover.

Three years ago a similar merger between the two companies failed after Alcan refused to give up its plant
in Norf. However, the Commission is now authorising it to choose between Norf and three of Pechiney’s
French sites (Neuf-Brisach, Annecy and Rugles). It seems clear that the latter sites will be sold off.

Will the Commission provide the names of the potential buyers of the units to be sold off, specifying in
particular whether they are European or non-European?

Will the Commission explain what other fundamental changes have been made to the situation to allow it
to alter its opinion on an Alcan-Pechiney merger?

Will it also explain what the condition regarding ‘removal of duplication’ between the two companies’
activities means in terms of jobs?

Given that, if Pechiney had taken over Alcan rather than the reverse, it would have come up against the
Canadian legal principle of ‘benefit to the country’, does the Commission consider that this operation is of
economic benefit to the European Union and to the European aluminium sector?

C 78 E/776

Official Journal of the European Union

EN

27.3.2004

Answer given by Mr Monti on behalf of the Commission

(28 November 2003)

On 29 September 2003, the Commission has authorised the acquisition of aluminium producer Pechiney
by Alcan. Whilst the Commission’s investigation of the transaction indicated that the transaction would
raise serious doubts in a number of markets, Alcan has proposed undertakings which the Commission
considered sufficient to remove the competition problems identified.

Alcan has offered divestment proposals that contain either Alcan assets or Pechiney assets. After having
carefully assessed the divestment packages, and only after Alcan had further improved its proposal, the
Commission has come to the conclusion that both packages consist of equally viable businesses that are
equally capable of removing the competition concerns identified by the Commission. The parties were able
to demonstrate to the Commission that there is a wide interest from potential buyers, both European and
non-European, for these assets. In this respect, it cannot be taken for granted that only Pechiney assets will
be divested. The merging parties will now commence negotiations with potential buyers, and only
afterwards, the potential buyer(s) will be presented to the Commission, who will then decide whether the
proposed buyer(s) can be accepted. At this stage, it is therefore not possible to indicate who the potential
buyer(s) might be.

It is important to stress that this case has benefited from a long pre-notification phase during which the
Commission has started its market investigation prior to the actual notification. In addition, the markets
investigated are not new to the Commission. A number of transactions in the aluminium industry, not the
least the aborted Alcan/Pechiney transaction three years ago, have been investigated by the Commission in
the past. What distinguishes this case most from the previously notified Alcan/Pechiney transaction is that
this time, Alcan has proposed remedies that clearly aimed at solving the competition concerns on a first
assessment basis. As these remedies were proposed early in the process and encompass ambitious,
structural and clear commitments, the Commission was able to market test them extensively and improve
the effectiveness and attractiveness of the remedy package further.

The effect of the acquisition of Pechiney on the number of people employed by Alcan has not been
communicated to the Commission. Indeed, the Commission would like to underline that the objective of
merger control is to make sure that, through a negative control, competitive structures are preserved.
A regulatory framework that upholds effective competition usually provides appropriate incentives to firms
to enhance their efficiency and thus to ensure their better survival in the respective markets. Further,
dynamic competition between competitive firms tends to increase the rate of innovation, thereby raising
the economy’s rate of growth. Ultimately, the protection of competition is a very effective way to ensure
growth and, thereby, stable and lasting jobs. Nevertheless,
in the short term, efforts to improve the
competitiveness of firms by means of mergers or acquisitions may involve restructuring and loss of
employment.

In the specific case under consideration, Alcan,
in order to obtain Commission’s clearance on the
operation, has committed to divest businesses and sell them off to independent third parties committed to
develop them in order to create viable competitors. Those activities actually represent the largest part of
the redundant assets between the two companies. For this reason, the remedy package is likely to limit a
possible short-term impact of the transaction on the level of jobs in the Union.

With regard to the consideration of the economic benefits of the operation, the Commission, as also
witnessed by the wording of the draft Commission Notice on the appraisal of horizontal mergers, is open
to consider the benefits of the operations analysed as a counterbalance to the possible anti-competitive
effects that it would create. Efficiencies can be one such mitigating factor, provided that they are at least in
part passed on to consumers. However, concerning efficiencies, it belongs to the parties in the operation to
put forward convincing arguments.

In this specific operation,
communicated to the financial markets that
improving the competitiveness of the company in the long term.

the parties have not done so in their notification, although Alcan has
this acquisition will create cost savings and synergies,

With regard to the national dimension of the operation, the Commission, in its competitive analysis, has to
focus on how a transaction could affect the competitive dynamics of the markets concerned, irrespective of
the identity and nationality of the notifying party or of the shareholders involved.