CCI Approves an Acquisition of Additional 6.51% Equity Shareholding in Clariant AG by SABIC International Holdings BV

On September 2, 2020, CCI approved the acquisition of additional 6.51% shareholding in Clariant AG (‘Clariant’) by SABIC International Holdings B.V. (‘SABIC BV’). [1]

SABIC BV is a wholly owned affiliate of Saudi Basic Industries Corporation (‘SABIC’) and is the holding company of SABIC’s international operations, including SABIC’s investments in the specialties sector.

SABIC is primarily active in the product segments of petrochemicals, agri-nutrients, metals and specialties materials. SABIC’s Indian subsidiaries are engaged inter alia, in: (i) compounding of engineering plastics and polycarbonate film and sheets; (ii) captive research; and (iii) development services. Additionally, Saudi Arabian Oil Company (‘Saudi Aramco’) had proposed to buy 70% shareholding in SABIC. Saudi Aramco is engaged in the exploration, production and marketing of crude oil and natural gas. In India, Saudi Aramco is active in the supply of crude oil, base oil, liquefied petroleum gas, polymers, synthetic rubbers and other petrochemical products.

Clariant, a Swiss chemicals company, is the parent company of the Clariant Group and is active in the production and distribution of specialty chemicals globally. Clariant, through its Indian subsidiaries operates in the business areas of: (i) care chemicals; (ii) natural resources; and (iii) catalysis, in India.

CCI observed that horizontal overlaps existed in the broader segments of: (i) non-ionic surfactants; and (ii) polyalkylene glycol (‘PAG’). The broader segment of PAGs could further be subdivided into polyethylene glycol (‘PEG’), polypropylene glycol (‘PPG’) and PAG-ethylene oxide/propylene oxide. At a narrower level, the parties exhibited overlaps only in the sub-segment of PEG. CCI noted that the relevant geographical market would be limited to India.

The combined market share of the parties in the broad market segment of non-ionic surfactants was between 0-5% by both volume and value, and the combined market share of the parties in the broad segment of PAG was between 5-10% by volume and 0-5% by value. In the narrower sub-segment of PEG, the combined market share of the parties was between 5-10% by both volume and value. CCI observed that a large number of players were present in each of the segment / sub-segments in India. CCI left the delineation of the relevant market open, as the combination was not likely to cause an appreciable adverse effect on competition (‘AAEC’) in any of the possible alternative relevant markets that could be delineated.

With regard to vertical relationships, CCI observed that SABIC and Clariant supplied two products to each other pursuant to pre-existing global supply arrangements. Accordingly, CCI observed vertical relations between the parties in the product segments of: (i) linear low-density polyethylene; and (ii) masterbatches. CCI noted that the sales made by the parties to each other were insignificant, and several other players were present in both these segments. Additionally, it was noted that Clariant had divested its entire masterbatches business unit to PolyOne Corporation. Accordingly, CCI granted approval.

 

[1] Combination Registration No. C-2020/05/746

Published In:Inter Alia Special Edititon - Competition Law - December 2020 [ English
Date: December 18, 2020