The UK Competition and Markets Authority (CMA) has raised concerns over the proposed merger of Cargotec and Konecranes.
Cargotec and Konecranes both offer a range of container handling equipment and services to port terminals and other industry customers worldwide.
Following a fast-track referral to a phase 2 investigation, the CMA has provisionally found that the merger would lead to a significant reduction in competition in the supply of a range of container handling equipment products.
“The CMA’s in-depth investigation has analysed a wide range of evidence, including data on bidding for previous contracts and many of the merging businesses’ internal documents, that show how they assess competition in the sector. The CMA has also engaged with a wide range of customers, competitors and other industry players to inform its provisional findings,” the competition watchdog says in a statement.
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 two key established suppliers would bring about.
Martin Coleman, chair of the CMA inquiry group, says: “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.”
Meanwhile, the merger partners say they disagree with the CMA’s provisional conclusions. They will consider the contents of the CMA’s initial findings and continue to engage with the CMA.
“In addition, Konecranes and Cargotec continue the dialogue and cooperation with other relevant competition authorities, including the European Commission and the US Department of Justice, and are considering ways to mitigate some of the concerns raised by the different competition authorities. Further announcements on the merger control processes will be made in due course,” they say.
Separately, the Australian Competition & Consumer Commission (ACCC) also outlined preliminary competition concerns in relation to the proposed merger. The ACCC invited submissions from interested parties by 19 November 2021 and will make its final determination in February 2022.