Thyssenkrupp, Tata Steel to get EU warning on steel joint venture — sources
European Commission, the anti-trust regulator, could veto their planned steel project unless the two companies offer concessions
Brussels — Germany’s Thyssenkrupp and India’s Tata Steel will be warned this week that EU antitrust regulators could veto their planned European steel joint venture unless they offer concessions, people familiar with the matter said on Monday.
The European Commission is expected to send a charge sheet known as a statement of objections to the companies, the people said. Such documents set out serious competition concerns which companies have to address with specific concessions or see their deal blocked.
Thyssenkrupp said it was the group’s understanding that such a statement would be sent by the European Commission in the course of the week, adding this was previously expected and would serve as the basis for further talks.
“As soon as the statement of objections has arrived we will thoroughly examine the commission’s arguments,” a spokesperson for Thyssenkrupp said, adding the group continued to be confident that the transaction could be closed in early 2019.
The joint venture, announced in June 2018, is the biggest shake-up in Europe's steel industry in more than a decade. To be named Thyssenkrupp Tata Steel, the entity will have about 48,000 workers and about €17bn in sales.
The commission, which last week blocked a rail business tie-up between Alstom and Siemens, did not immediately respond to a request for comment. Tata Steel was not immediately available for comment.
Shares in Thyssenkrupp, scheduled to report first-quarter results on Tuesday, fell as much as 1.9% on the news, hitting their lowest level since February 17 2016.
Shares traded 0.4% higher in afternoon trading .
The deal, which took two years to get off the ground, is aimed at creating synergies and reducing overcapacity and will form the continent’s second-largest steelmaker after ArcelorMittal.
The EU competition enforcer opened an in-depth investigation in 2018 and identified issues in steel for car parts, packaging such as food and aerosol cans and electrical steel for engineering products including transformers.
It will decide on the transaction by April 29.
Analysts expect remedies in the area of packaging, or tinplate, where the combined entity holds a share of 50% of the European market, a person familiar with the deal said.
Rasselstein, Thyssenkrupp’s packaging steel unit, posted sales of €1.16bn in the 2015/2016 fiscal year and employed about 2,400 workers.