UK regulator rejects Konecranes, Cargotec merger

UK regulator rejects Konecranes, Cargotec merger

 

The UK Competition & Market Authority of the United Kingdom (CMA) has provisionally found that the proposed merger of Finnish engineering majors Cargotec and Konecranes raises competition concerns in the supply of container handling equipment.

Following an in-depth investigation, the authority concluded that the merger “would lead to a significant reduction in competition in the supply of a range of container handling equipment products”.

The evidence gathered by the CMA consistently shows that Cargotec and Konecranes are both major suppliers of container handling equipment, competing closely for business in the UK, and that UK customers would have few remaining alternative suppliers after the merger. 

While Cargotec and Konecranes have suggested that there would be an increased competitive threat from Chinese suppliers in future, the independent inquiry group found that this would not be sufficient to prevent the significant loss of competition that the merger of the two key established suppliers would bring about.

“Container handling equipment plays a key role in the smooth running of UK ports, moving millions of containers each year to make sure that goods arrive safely on our shelves and British businesses are able to supply their customers overseas. 

“We are currently concerned that this merger could lead to a reduced quality of service or higher prices for port terminals and other customers of container handling equipment. Our competition concerns need to be addressed to ensure that these customers are not worse off as a result of the deal, and there is no negative impact on UK consumers and businesses,” Chair of the CMA inquiry group, Martin Coleman, said.

The CMA plans to issue its final report on the merger by 1 April 2022.

Recall that Cargotec and Konecranes announced plans to combine their operations through a merger in 2020. The duo recently unveiled their post-merger operating model. Both companies remain confident that the merger will be completed by the end of June 2022.

In August 2021, China gave the green light to the duo to proceed with their merger plans. However, the merger plan faced a hurdle in Australia after the Australian Competition & Consumer Commission (ACCC) outlined preliminary competition concerns.



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