Before the Commission has approved Usinor's acquisition of Cockerill Sambre, certain conditions had to be applied.

Two areas were sensitive and raised doubts as to the compatibility with the Common Market. These were cold rolled steel profiles for the constriction industry in France and the other the distribution of flat carbon steel products in France. Usinor had therefore to give undertakings to the Commission to divest activities representing 70,000 tonnes of cold rolled steel profiles and more than 330.000 tonnes of carbon steel flat products distributed through steel stock holders and steel service centres.

Usinor, one of the major producer had a turnover in 1995 amounting to 10,889 million Euro, Cockerill Sambre, the Belgian iron and steel group, owned by the Societe Wallonne de la Siderurgie (all shares hold by the Walloon Government) had a turnover in 1997 of 5,189 million Euro.

Serious doubts concerning the competitive aspects concerned cold rolled steel profiles for the building industry in France. These profiles are produced from galvanised and prepainted flat steel strip and are intended for facades, roofs and floors of warehouses and industrial buildings. After the operation the new entity would have amounted to a combined market share of 65% in France. The competitors hold market shares less than 8%, whether they are subsidiaries of large steel companies such as Isocab (Thyssen Krupp), Profilacier (British Steel) or Myriad Hoogovens or independent companies such as Cisabec, Meusedec.

The customers questioned by the Commission said that with this new group Usinor Cockerill they would no longer be able to negotiate effectively as the entity would become their only supplier.

Therefore, the parties proposed to divest to an independent third party a number of production and sales operations representing a total volume of 70,000 tonnes of cold rolled profiles delivered on the French market. This put on the market a player capable of competing immediately and having production facilities, sales network recognised trademarks and geographical coverage of the French market.

The distribution of flat products to carbon was also a concern for competitors and customers; it concerned mainly the market power of the new entity resulting from the operation. The new group would amount to 50% which could have given it the possibility of determining the prices, of controlling or restricting distribution or of effective competition within the meaning of article 66(2) of the ECSC Treaty.

In order to remove the doubts raised by the concentration on the French market of the distribution of flat steel products through stockholders or steel service, Usinor proposed modifying the operation. The divestments proposed include all assets, personnel and contracts necessary for the operation of the activities concerned. Usinor's commitment reduces the combined market share of the new entity to approximately 40% in France of the market for the distribution of flat steel products. Competitors will also have immediate access to an established sales network.

The other markets concerned by the operation would face major competition such as from Thyssen Krupp Stahl, British Steel, Arbed/Aceralia, Hoogovens and Riva-Ilva.

After Usinor took these commitments the Commission decided not to oppose to the proposed operation and to authorise under Article 66 of the ECSC Treaty and to declare it compatible with the common market under the Merger regulation

This article is based and incorporates information provided by the European Commission (Press Releases) and is intended for general information. Specialist advice should be sought before acting on it.