UK joins regulators concerned over Cargotec-Konecranes merger


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Cargotec and Konecranes announced a merger in October 2020 (Konecranes)

Posted on November 26, 2021 at 7:20 PM by

The maritime executive

Cargotec and Konecranes, two of the leading suppliers of cargo handling equipment, face further opposition to their proposed merger from the UK Markets and Competition Authority. The UK regulator tentatively estimated that the merger would significantly reduce competition in key market segments, following similar concerns raised by European and Australian authorities.

The companies announced in October 2020 their intention to team up to strengthen their competitive position against Chinese crane manufacturers as well as unlock value in their operations by providing a lifecycle platform for customers and putting more emphasis on sustainability. The combined company would serve a wide range of customers including container handling, manufacturing, transportation, construction and engineering, paper and pulp, metals production, mining, energy , chemicals and maritime industries. In addition to shareholder approval, they require multiple antitrust reviews. They originally aimed for the merger to close in 2021, although it is now slated for the first half of 2022.

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

The CMA has provisionally noted that the planned merger would lead to a significant reduction in competition in the following areas: the supply of certain types of gantry cranes (gantry cranes, automated stacker cranes); mobile equipment (reach stackers, heavy forklifts and empty container handlers); and horse-drawn carriages and shuttles. They said they believed UK customers would have few alternative suppliers left after the merger.

Konecranes and Cargotec responded to the announcement saying they did not agree with the CMA’s tentative findings. They will review the content of the CMA’s initial findings and continue to work with CMA. They noted that in a provision report, CMA would continue to consult with companies and other stakeholders and has not made a formal request or offered recourse to companies at this time.

In addition, Konecranes and Cargotec have indicated that they are continuing dialogues and cooperation with other relevant competition authorities, including the European Commission and the US Department of Justice.

UK authorities are due to publish their final report by April 1, 2022, while in the EU, a Phase II review examining in more detail the proposed merger began in July 2021. At the end of October 2021, the Australian Commission on Competition and Consumers (ACCC) expressed preliminary concerns about the merger. They noted that the two companies were the only providers of straddle carriers to Australian terminals. While noting that the market is small for gantry cranes, they also expressed concerns and said that they are also looking at mobile container handling equipment as well as maintenance services. Australian regulators are expected to publish their final report by mid-February 2022.

Following today’s announcement by UK authorities, the companies said they were considering ways to alleviate some of the concerns raised by various competition authorities.

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