Chile antitrust authority Fiscalía Nacional Económica (FNE) yesterday approved with mitigation measures the $90bn merger of Linde AG and Praxair, Inc.
The news follows the US Federal Trade Commission’s (FTC’s) clearance of the business combination, announced on Monday.
The investigation, conducted within the framework of the control of concentration operations, began on 7th February (2018) and ended on 19th October.
The measures approved by the FNE include the divestment of all of Praxair Chile’s assets, which must be transferred to an independent third party within a maximum period of nine months from the approval of the operation, together with other additional measures.
The notifiers proposed MG Industries GmbH, a joint venture formed by Messer Group GmbH and CVC Advisers, as the appropriate purchaser of the divestment package, a name that was accepted by the FNE.
Although from the beginning of the investigation the parties proposed the divestment of the assets of the Praxair subsidiary in Chile in favour of an independent third party, the FNE warned that these measures were not sufficient to mitigate the totality of the risks generated by the merger, especially regarding those gases whose productive source was in entities related to Praxair located abroad.
The risk of substantial reduction to competition in the carbon dioxide market was highlighted by the FNE since much of this gas sold locally by Praxair Chile came from a related entity located in Argentina.
This is compounded by the existence of considerable barriers to entry and the high market concentration rates that would be generated in Chile by virtue of the merger.
After learning this analysis from the FNE, the parties extended their initial offer of measures, incorporating in addition to the divestment of Praxair’s assets in Chile, the signing of a carbon dioxide supply contract in favour of the buyer of the divested package, under conditions equivalent to those available for Praxair Chile.
In addition, the notifiers obligated themselves to allow a third party to exploit the raw carbon dioxide streams produced in their facilities located in the premises of ENAP in the municipality of Hualpén, pledging not to intervene in the determination of their continuity variables nor of quality.
The FNE said the last package of measures offered would tend to avoid the verification of risks to competition in the gas industry in Chile and the identity of the buyer proposed by the parties would allow to re-establish the competitive rivalry in the Chilean market.
The resolution and the approval report will be published on the FNE website once the public version of these documents has been prepared.